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FEEDING THE 
GERMAN EAGLE 


Soviet Economic Aid to 
Nazi Germany, 1933-1941 




Contents 

Preface ix 

Abbreviations xi 

Introduction 1 

The Problem 1 

Of Politics and War Economies 3 

Murphy’s Law 5 

Notes 7 

1. Traditional Interdependence 11 

World War I 11 

The “Have-Nots” Have Each Other, 1919-27 12 

The First Five-Year Plan, 1928-32 14 

Paying for the First Five-Year Plan, 1933-34 15 

The New Economic Order, April 9, 1935 17 

Notes 19 

2. Failed Economic Partnership 23 

First Failure: Schacht’s Plan, April 29, 1936 23 

Second Failure: Goring’s Plan, December 24, 1936 24 

Third Failure: The Purges, March 1, 1938 26 

Fourth Failure: Schulenburg’s Plan, December 19, 1938 28 

Fifth Failure: Schnurre’s Aborted Visit, January 28, 1939 31 

Sixth Failure: Schulenburg in Moscow, March 11, 1939 34 



vi Contents 


Notes 36 

3. Talking About Talking 41 

First Soundings, April 17 41 

Molotov’s Maybe, May 20 43 

More Soundings, June 17 46 

Talks Reopened, July 21 47 

Notes 50 

4. Restored Economic Partnership 53 

Dining Out, July 26 53 

Economic End Game, August 12 55 

The Final Go-Ahead, August 19 56 

Notes 58 

5. Toward an Economic Alliance 61 

Political End Game, August 23 61 

War Begins, September 1 63 

Dividing Poland, September 17 65 

Collusion in the Kremlin, September 28 69 

Notes 72 

6. The German Plan 77 

Ritter and Schnurre Fly to Moscow, October 7 77 

The Soviet Slow and Steady, October 22 79 

Ritter Returns, October 26 81 

Notes 82 

7. The Soviet Plan 85 

Men in Suits, November 7 85 

The Soviet Offer, November 30 88 

The Delegates Depart, December 13 90 

Notes 93 

8. The Final Plan: Part I 97 

First Moscow Economic Summit, December 31 97 

Second Moscow Economic Summit, January 29, 1940 100 

Third Moscow Economic Summit, February 8 103 

Signing on the Dotted Line, February 11 104 

Notes 106 

9. Gas and Grain for Coal and Cruisers 109 

A Slow Start, March 8 109 

Goring the Go-Between, March 29 111 



Contents 


vii 

Our Friend Molotov? April 9 113 

War in the West, May 10 114 

Final Contracts, May 28 117 

Notes 118 

10. Delivering the Goods 123 

Big is Bad, June 10 123 

Bessarabia and Bukovina, June 28 125 

Hitler Turns East, July 21 126 

Stalin Turns West, August 6 128 

Notes 129 

11. New Problems Addressed 133 

The Delicate Balance, September 12 133 

Riding the Rails, October 1 135 

Once More into the Breech, October 28 137 

Notes 139 

12. The Final Plan: Part II 143 

Molotov Pays a Visit, November 12-14 143 

Tariffs and Tolls, December 1 145 

Soviets Demand Simultaneous Settlement, December 22 149 

Sign Here, and Here, and So On, January 10, 1941 150 

Notes 153 

13. Grain for Guns 159 

Another Slow Start, February 11 159 

The Eastern Connection, March 18 161 

Yugoslavia, April 6 163 

Notes 165 

14. Germany Bites the Hand That Fed It 169 

Another Delicate Balance, April 18 169 

Cautious Appeasement, May 10 170 

The Last Shipments, June 22 171 

Counting the Costs, 1941-44 173 

Notes 175 

Conclusion 179 

Notes 183 

Appendix A: Tables 185 

Notes 222 



viii Contents 


Appendix B: German-Soviet Economic Treaties 

Bibliography 

Index 


227 

241 

255 



Preface 


“Anything that can go wrong, will go wrong,” states Murphy’s Law. And this 
proved to be the case with the economic foreign policy that the ruthless leader of 
the Soviet Union, Josef Stalin, attempted to follow from 193 9 to 1941 in regard to 
Germany. According to his logical and cautious plan, trade with the Nazis would 
simultaneously keep war away from Soviet borders, prolong a debilitating struggle 
between communism’s capitalist enemies, and significantly strengthen the Soviet 
military and war economy. It all made perfect sense, except for the appearance of 
Mr. Murphy, this time in the guise of the equally brutal, but often incautious and 
illogical, Adolf Hitler. While contemporary military wisdom assumed that 
Germany would become enmeshed in World War I—style, drawn-out conflicts, 
Hitler won a series of rapid military victories at the longest of odds against Poland. 
Norway, France, Yugoslavia, and Greece. And while contemporary military 
wisdom also assumed that Germany would have to deal with the growing Anglo- 
Saxon alliance first before a struggle with the USSR would be at all possible, 
Hitler did the unthinkable and launched his invasion of the Soviet Union, 
codenamed Operation Barbarossa, on June 22, 1941. In short. Stalin’s rational 
plans fell victim to Murphy’s Law. 

Mr. Murphy has also made an occasional appearance in the course of 
researching and writing this project. On the whole, however, I have been 
continually amazed by the incredible support I have received. I would like to 
acknowledge first of all the guidance and sound advice of James Diehl of Indiana 
University-Bloomington and of my father, Edward Ericson, Jr., of Calvin College. 
I also want to thank the following senior colleagues for their advice and the 
insights of their works: William Cohen, Hiroaki Kuromiya, Charles Jelavich, and 
the late Barbara Jelavich, all of Indiana University; John Dodge of Indiana 



x Preface 


Wesleyan University; Gerhard Weinberg of the University of North Carolina at 
Chapel Hill; and Rolf-Dieter Muller of the Militargeschichtliches Forschungsamt 
(Military History Research Office) in Potsdam (formerly in Freiburg). Not to be 
forgotten are the many librarians, archivists, and research assistants who assisted 
me in my work, particularly Kathy Struck and Conrad Bult at Calvin College and 
Debra Cox at John Brown University. 

This project could not have been completed without the financial support of 
Indiana University and John Brown University, both of which supported this 
research through various grants. Of even greater importance was the personal and 
professional support of family and friends in the United States and Germany. Most 
of all, I would like to thank my wife, Julie, without whose inspiration little of this 
work could or would have been done. 



AA 

AG 

AGK 

Akt. 

APA 

ArWI 

BA 

BAAP 

BAMA 

Bd. 

BdRAM 

BdSts 

BfVP 

BM 

cif 

DAD 

DAF 

DBFP 

DDfWiO 


Abbreviations 


Auswartiges Amt (Foreign Office) 

Aktiengesellschaft (Incorporated) 

Ausfuhrgemeinschaft fur Kriegsgerat (Export Association for 
War Materials) 

Akten (Document) 

Auftenpolitisches Amt der NSDAP (Foreign Policy Office of 
the Nazi Party) 

Arbeitswissenschaftliches Institut (Institute for Industrial 
Sciences) 

Bundesarchiv, Koblenz (Federal Archives in Koblenz) 
Bundesarchiv, Abteilung Potsdam (Federal Archives in 
Potsdam) 

Bundesarchiv-Militararchiv, Freiburg (Federal-Military 
Archives in Freiburg) 

Band (Volume) 

Biiro des Reichsaussenministers (Foreign Ministry Bureau) 
Biiro des Staatssekretars (State Secretary’s Bureau) 
Beauftragter fur den Vieijahresplan (Representative for the 
Four-Year Plan) 

Botschaft Moskau (German Embassy in Moscow) 

Cost, insurance, freight (all costs paid for by the supplier) 

Der Aussenhandel Deutschlands (German Foreign Trade) 
Deutsche Arbeitsfront (German Worker’s Front) 

Documents on British Foreign Policy 

Deutsche Delegation fur Wirtschaftsverhandlungen in 



xii Abbreviations 


Dego 

DGFP 

doc. 

DR 

EfA 

FAH 

fob 

FRUS 

GHH 

GmbH 

GPO 

HAKrupp 

HaPol 

HWK 


IfW 

IG 

IMT 

kg 

MA 

M.E. 

MGFA 

n. 

NC&A 

NE-Metalle 

NSDAP 

NSR 

OKH 

OKW 

PA 

Pol. 

PrA 

RA 


Ostasien (German Delegation for Economic Talks in East 
Asia) 

German Gold Discount Bank 
Documents on German Foreign Policy 
Document 

Dienststelle Ribbentrop (Special Office Ribbentrop) 
Einrichtungen fur den Aussenhandel (Institutions for Foreign 
Trade) 

Familienarchiv Hiigel (Hiigel Family Archives) 

Free on board (receiver pays for costs after placed on ship) 
Foreign Relations of the United States 
Gutehoffmmgshutte AG 

Gesellschaft mit beschrankter Haltung (Limited) 

Government Printing Office 

Historisches Archiv der Friedrich Krupp GmbH, Essen 
(Krupp Archives in Essen) 

Handelspolitische Abteilung (Economic Policy Section) 
Sonderstab fur Handelskrieg und wirtschaftliche 
Kampfmassnahmen (Special Staff Office for Economic 
Warfare) 

Institut fur Weltwirtschaft, Kiel (Institute for World 
Economics in Kiel) 

LG. Farben 

International Military Tribunal 
Kilogram 

Mannesmann Archiv, Diisseldorf 
Mineralol-Einfuhr GmbH (Oil Import, Ltd.) 
Militargeschichtliches Forschungsamt (Military History 
Research Office) 

Footnote 

Nazi Conspiracy and Aggression 
Nichteisenmetalle (Nonferrous Metals) 

Nationalsozialistische Deutsche Arbeiterpartei (National- 
Socialist German Worker’s Party) 

Nazi-Soviet Relations 

Oberkommando des Heeres (Army High Command) 
Oberkommando der Wehrmacht (Armed Forces High 
Command) 

Politisches Archiv des Auswartigen Amtes, Bonn (Foreign 
Office Archives) 

Politische Abteilung (Political Section) 

Pressearchive (Press Archive) 

RufilandausschuB der Deutschen Wirtschaft (Russia 
Committee of German Industry) 



Abbreviations xiii 


RAM 

RfEuL 

RfF 

RfG 

RFM 

RfW 

RfwP 

RK 

RL 

RM 

Ro 

RSt 

RWK 

RWM 

RWW 

Ski. 

SR 

Stb 

t 

v. 

VO 

Vowi 

WA 

WFSt 

WG 

Wi 

Wifo 

WiRuAmt 

ZAV 


Reichsaussenminister (Foreign Minister) 

Reichsstellen fur Ernahrung und Landwirtschaft (Offices for 
Food and Agriculture) 

Reichsstelle fur Fette (Office for Fats) 

Reichsstelle fur Getreide (Office for Grains) 
Reichsfinanzministerium (Finance Ministry) 

Reichsamt fur Wirtschaftsausbau (Office for Economic 
Development) 

Reichsamt fur wehrwirtschaftliche Planung (Office of War 
Economy Planning) 

Reichskanzlei (Chancellery) 

Reichsministerium der Luftfahrt (Air Transport Ministry) 
Reichsmark 

Rohstoff Abteilung (Raw Material Section) 

Reichsstelle (Imperial Office) 

Reichswirtschaftskammer (Chamber of Commerce) 
Reichswirtschaftsministerium (Economics Ministry) 
Rheinisch-Westfalisches Wirtschaftsarchiv, Koln (Rhenish- 
Westphalian Economic Archives in Cologne) 
Seekriegsleitung (Head of Naval Warfare) 

Statistisches Reichsamt (Bureau of Statistics) 

Stabsabteilung (Staff Section) 

Tons (Metric) 

Von (German Title of Nobility) 

Verbindungsoffizier (Liaison Officer) 

Volkswirtschaftliche Abteilung (Political Economy Section) 
Werksarchiv (Company Archives) 

Wehrmachtsfuhrungsstab (Armed Forces Command Staff) 
Wirtschaftsgrappen (Economic Group) 

Wehrwirtschaftliche Abteilung (War Economy Section) 
Wirtschaftliche Forschungsgesellschaft m.b.H. (Economic 
Research Corporation) 

Wehrwirtschafts- und Riistungsamt (War Economy and 
Armaments Office) 

Zusatz-Ausgleichs-Verfahren (German Export Subsidy) 



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Introduction 


In the late afternoon of September 27, 1939, Reich Foreign Minister Ribbentrop 
and his entourage were winging their way to Moscow to solidify the tentative 
partnership worked out in the economic treaty of August 19 and the Nazi-Soviet 
Pact of August 23. But Ribbentrop’s Condor had been delayed in Konigsberg for 
lunch, refueling, and more passengers, and the slower JU-52 escort plane carrying 
second-level officials arrived first. It was, therefore, the economic negotiators, in 
particular Dr. Karl Schnurre, the head of the German Foreign Ministry’s Eastern 
European Economic Section, who initially received the red-carpet treatment. 1 

This confusion at the Khodynka airfield was emblematic of the wider 
developments in the Nazi-Soviet relationship from 1936 to 1941. For in many 
ways it was Schnurre and not Ribbentrop who was the key figure in the evolution 
of the Nazi-Soviet partnership because the economic ties were often more central 
to whatever friendship existed between the two states than their political or 
military cooperation. And for good reason. With a major war approaching, 
Germany increasingly needed Russia’s raw materials, and the USSR needed 
German machines and technology. 


THE PROBLEM 

The central problem facing Hitler was lack of raw materials: how could 
Germany, a relatively small country with few natural resources, fight a major war 
against continent- or globe-spanning empires? By the late thirties the Fuhrer had 
three options: solidify the autarkic economy before going to war (the Four-Year 
Plan approach), conquer and plunder the needed resources (the Austria- 
Czechoslovakia strategy), or reach agreements with one or more major powers (the 



2 Feeding the German Eagle 


Nazi-Soviet Pact proposal). Although Hitler and the Nazi leadership appeared to 
prefer building up a self-sufficient economy (the autarky approach), the necessary 
infrastructure was expensive and would not be in place until 1942 at the earliest. 
The loot-and-plunder strategy ran the risk of escalating into the big war that Hitler 
was trying to avoid (as exemplified by what happened in Poland). Hitler had 
looked to an understanding with England in the mid- 1930s, but by the summer of 
1938 he had intensified his naval program (always a key indicator of his intentions 
towards Great Britain) and had declared that we “must reckon England 
permanently among [our] enemies.” 2 

With his other options closed, Hitler, reluctantly to be sure, had to consider 
closer relations with the Soviet Union for economic reasons alone. As a number 
of German studies produced on the eve of the war argued, only the USSR could 
plug some of the major gaps in the German war economy, particularly in oil, 
manganese, rubber, and perhaps even grain. 3 

Without oil, of course, the German military would be unable to carry out any 
of the tasks Hitler had assigned for it. Unfortunately for the Fuhrer, the Greater 
Reich could only supply 25 percent of its own oil needs, 4 leaving Germany 2 
million tons short a year 5 and an eye-popping 10 million tons below planned 
mobilization totals. 6 With Germany cut off from its (and the world’s) main 
supplier, the United States, Hitler would have to look to potential European 
sources for his oil, namely to Rumania and Russia. 

The problem was similar with regard to metals and metal ores such as 
chrome, wolfram, nickel, molybdenum, and manganese, all necessary to produce 
the hardened steel used in tanks, ships, and other weapons of war. But Germany 
relied entirely on imports for many of these raw materials, imports that would end 
once the war began. Although the manganese situation was somewhat better, with 
the Greater Reich producing 40 percent of its own needs, 7 the British blockade 
would cut Germany’s link to South Africa, its main supplier. Again, the 165,000- 
tons-a-year shortfall could only be made good by the Soviet Union. 8 Furthermore, 
Hitler would need Stalin’s permission if he wanted to ship wolfram and 
molybdenum from China and chrome from Turkey along Russian rail lines. 

Hitler would also need Soviet help procuring and shipping another crucial 
resource from the Far East-rubber. As the Second Reich had discovered in World 
War I, shortages of rubber meant fewer tires and fewer shoes, among other things. 
The German military, in other words, had to have rubber as much as it did oil and 
steel. Although by 1939 Germany’s developing synthetic materials plants could 
handle about 50 percent of the Reich’s rubber needs, 9 even these plants still 
required huge amounts of natural rubber to mix with the synthetic product. But the 
rubber production of Malaysia and the East Indies was dominated by the British 
and the Dutch. With stockpiles sufficient for only two months, 10 Hitler had to find 
some way to get more rubber to the Reich. 

In comparison to these raw material shortages in oil, metals, and rubber, 
Germany’s food supply was fairly secure. Imports made up only 11 percent of the 
Reich’s overall food requirements. On the other hand, imports of fats and oils 



Introduction 


3 


accounted for 40 percent of Germany’s needs. 11 Here, also, Soviet imports of 
Ukrainian grains or Soviet transshipments of Manchurian soybeans could make 
up the shortfall, a shortfall that would only grow if Germany conquered more 
territories (such as France and the Benelux countries) with an overall food deficit 
and if the Greater Reich’s food production decreased as a result of the war (which 
it did). 

Of course, the Soviets would clearly want something substantial in return for 
supplying raw materials they themselves needed for their own expanding war 
economy. In the short term, the Soviet Union needed militaiy equipment and 
weapons designs to strengthen the purge-weakened Red Army and Red Navy. For 
example, the Soviets would ultimately ask for, among other things, gun turrets, 
cruisers, mines, battleship blueprints, and the latest German aircraft. In the long 
term, the Soviets also required machine tools and new technology to help them 
develop their own industrial base. German construction of synthetic materials 
plants, for instance, would initially loom very large in German-Soviet economic 
negotiations. 12 Such demands, however, would prove difficult for a Germany 
already engaged against the West. How could the Reich afford to sell guns to the 
Soviets that the Wehrmacht or the Kriegsmarine might need to fight the English 
and French? 

Even if the two sides could agree on the amounts and types of items to be 
traded, a major stumbling block would simply be transporting the goods to the 
other party. The Soviet transportation network was woefully underdeveloped. 
Roads were nonexistent, and the rail lines could barely handle their current loads, 
especially the Trans-Siberian route to the Far East. Soviet trains also ran on a 
broader gauge than those of the rest of Europe, creating tremendous complications 
for exchanging goods between the two countries (a problem that became even 
worse with the redrawing of boundary lines in late 1939 and 1940). Water 
transport might be able to take up some of the slack, but the overall situation was 
problematic, to say the least. 13 In short, getting Germany and the USSR together 
might be a difficult match to make. 

OF POLITICS AND WAR ECONOMIES 

Nevertheless, both sides, and Germany in particular, desperately wanted the 
other’s economic help. If these economic relations were so important, however, 
why are they still so poorly understood? The answer is two-fold. First, the key 
documents for the economic negotiations are either missing or scattered 
throughout various archives. As the editors of Documents on German Foreign 
Policy explain, “the basic secret and open files of the Economic Policy Department 
on the Soviet Union are missing for the period covered by this volume, as are the 
economic files of the Embassy in Moscow.” 14 Published collections that might at 
least bring together the remaining documents have followed the pattern of the 
secondary literature and skipped over the “long and bulky” economic negotiations 
in order to concentrate on the political negotiations. 15 Consequently, one must turn 



4 Feeding the German Eagle 


to unpublished sources in various German archives to find the real story of how 
valuable Soviet economic aid was for Germany during World War II. 16 

Second, and probably more important, the political and military events appear 
flashier and more dramatic-economics as the dull science versus Ribbentrop 
swooping into Moscow to sign last-minute treaties that reshape the face of Europe. 
As a result, even those works that one might expect to cover the economic 
relations and their importance for Germany in some detail, such as histories of the 
German-Soviet relationship or studies of the German war economy, have largely 
relegated this issue to the sidelines in favor of other questions. 

What are those other issues? In the case of the general histories of the war in 
Europe, the focus has usually been on the ease or difficulty of the German 
advance. Historians divide into two camps. Much of the early writing was based 
on the memoirs and autobiographies of German military leaders 17 and 
consequently provided an often distorted version of events in which Hitler’s 
mistakes, real and otherwise, were analyzed in excruciating detail while the 
mistakes of various subordinates were glossed over. In other words, Hitler, or 
Stalin in the case of the Soviet Union, 18 became the scapegoat for practically every 
German misstep made during the war. Without the Fiihrer, supposedly, the 
Wehrmacht would have easily won the war. 

Much of the professional historical writing over the past three or four decades 
has tried to puncture the myth of an invincible German military machine 
hamstrung by Hitler. 19 Instead, it was Hitler’s willingness to risk adventurous 
campaign strategies and try innovative tactics that proved a key factor in 
Germany’s success during the first two years of the war. Those failures that 
Germany did encounter were due in much greater measure to various supporting 
players (particularly in the military) than had been previously realized. Even the 
more popular-level histories have caught on, noting that Germany's early 
conquests were, in the case of the German lightning success in France, for 
example, “almost a miracle.” 20 And close-run victories might easily have become 
defeats without Soviet economic and political support. 

As for the German war economy, the discussion has centered on the extent of 
the Reich’s mobilization efforts. Here again we find two major arguments. The 
early works contended that the Germans never really mobilized until 1942 or 
later. 21 The United States Strategic Bombing Survey, for instance, reached “the 
[inescapable] conclusion . . . that Germany’s war production was not limited by 
its war potential-by the resources at its disposal-but by demand; in other words, 
by the notions of the German war leaders of what was required to win. The 
Germans did not plan, nor were they prepared for, a long war.” 22 According to 
Alan Milward, this delayed mobilization was part of Hitler’s explicit design for a 
Blitzkrieg economy that “allowed Germany to play the part of a great power,” and 
avoid “the total economic commitment of ‘total war’” by fighting a series of 
campaigns in short bursts. 23 

More recent scholarship, however, has concluded that the Germans were 
mobilizing for total war from 1939 at the latest, and probably from 1936. 24 The 



Introduction 5 


plan was to construct the military-industrial complex first and then build the ships, 
tanks, and planes. But when the big war they were expecting in 1943 arrived in 
1939 instead, the Germans were forced into a “total war of improvisation” in 
which they tried to do both simultaneously. Far from having excess industrial 
capacity in the first two years of the war, “all the figures show conclusively that 
the German economy had converted the great bulk of its labour and capacity to 
war work by the end of 1941.” 23 Any economic aid, therefore, would have been 
important to the straining German economy. 

In regard to the general German-Soviet relationship, most historians have 
skipped the economic negotiations and concentrated on the lead-up to the Nazi- 
Soviet Pact in the summer of 1939 26 and the development and implementation of 
Operation Barbarossa in the summer of 1941. 27 The primaiy issue has been which 
of these two powers was the aggressor-who initiated talks in 1939, for example, 
and who started planning to attack whom in 1940 and 1941? Furthermore, since 
their ideological differences were supposedly so great, why did both powers decide 
to work together from 1939 to 1941? 

Again we find two primaiy arguments-Stalin as reluctant appeaser or as 
cautious expansionist. Although there have been some extremely pro-Soviet works 
(Stalin as far-sighted anti-Nazi) 28 or pro-German works (Hitler waging a 
preventive war against Bolshevism), 29 most historians fall into either of these two 
less extreme camps. The “appeasers” argue that Stalin preferred to work with 
France and Britain but was forced by the West’s dilatoriness into a last-minute 
agreement with Hitler. And as Germany’s power continued to grow, Stalin had no 
choice but to appease Hitler even further in order to avoid Nazi aggression or 
possibly even the nightmare vision of complete capitalist encirclement. 30 The 
“expansionists” contend that Stalin preferred an alliance with Hitler from the very 
beginning, because it offered him security, territory, technology, and more 
possibilities to further his world revolutionary goals. 31 Any delays were designed 
primarily to raise Stalin’s asking price. 


MURPHY’S LAW 

Almost sixty years after World War II began, these debates about the general 
course of the war, German economic mobilization, and Nazi-Soviet relations 
continue. The opening of the Soviet archives was supposed to answer some of 
these questions, but the two recent books based on these documents have come to 
opposite conclusions. 32 Since German-Soviet economic relations profoundly 
influenced all these aspects of the war, this study can shed some light on these 
historiographical debates. If Germany was barely mobilized and still easily 
winning the war, for instance, then closer political and economic relations with 
the Soviet Union would have meant relatively little to the Reich, and the 
documents would probably show the Sonets initiating contacts and appeasing the 
growing German colossus. In fact, a close study of German-Soviet trade supports 
the more recent version of events in which a resource-poor Reich was barely 



6 Feeding the German Eagle 


winning its “total war of improvisation” and therefore had to approach the USSR 
first and accede to most of Stalin’s demands. The “expansionists,” in other words, 
are right, though perhaps more because of Stalin’s emphasis on realpolitik than 
the ideological or personal motivations some have attributed to Stalin. 33 Stalin’s 
early and frequent approaches to the Germans and his tough bargaining 
throughout show him not to be appeasing Hitler but to be eager for closer relations 
with the Reich and also to be taking advantage of an increasingly desperate 
German economic situation to expand the USSR’s power. 

Among those few historians who have focused on German-Soviet economic 
relations, however, not all have agreed with this interpretation. 34 In fact, the only 
other substantive piece on the trade negotiations, Heinrich Schwendemann’s 
revised dissertation, supports the “appeasers” position. 35 Schwendemann is 
thorough, analytical, and provocative. Unfortunately, he is also too often 
misleading. The problem is twofold: Schwendemann’s desire to be completely 
original-his “pride,” if you will; and his bias or “prejudice” against the often 
superior German source material in favor of other evidence. The result is an 
intriguing but ultimately flawed work. 36 

So what do the extensive but little-used German files tell us about the 
economic relationship and its significance? This study makes possible at least five 
major conclusions which will serve as the building blocks for the detailed narrative 
to follow: 

(1) The German war economy suffered from continuing raw material shortages in 

a series of key areas that, if Hitler were to continue his expansionist policies, 
could only be dealt with by economic cooperation with or domination of the 
Soviet Union. Hitler preferred the latter policy (as did many in the military), 
but was willing to follow the former course for as long as he thought 
necessary. 

(2) Stalin appeared to prefer an agreement with Germany over one with the Allies 

in part because these German economic needs gave him a superior bargaining 
position that he exploited logically, and often separately from the political 
situation, to extract economic concessions from the Germans throughout the 
entire course of the relationship. Although Stalin did occasionally use some 
elements of economic blackmail for political purposes, especially in the earlier 
phases of the relationship, and less frequently a sort of economic 
appeasement, particularly at the very end of the partnership, the Soviet Vozhd 
concentrated on hard-nosed economic bargaining to get the best trade 
arrangements he could and expand Russia’s power. 

(3) Hitler’s new focus in July 1940 on attacking Russia instead of England was 
made primarily for ideological reasons but also because of increasing 
concerns that the Soviet Union could not be trusted as an ally and that the 
Soviet trade relationship would not aid Germany enough to see it through a 
possible long-term struggle with the Anglo-Saxon powers. That these 
concerns were shared by many in the military and elsewhere goes far toward 



Introduction 


7 


explaining the support that planning for Operation Barbarossa received 
among Germany’s ruling elite. 

(4) Despite the tough Soviet bargaining and the German concerns about the extent 

of Soviet aid, Russian shipments and trans-shipments of raw materials made 
a crucial contribution to the German war-making capability in the first two 
years of the war. Gerhard Weinberg’s initial questioning of “whether without 
Soviet aid . . . the German attack in the West in 1940 would have been as 
successful as it was and the attack on the Soviet Union would have been 
possible at all” 37 turns out to have been substantially correct. 

(5) Finally, that Stalin’ s hard-won concessions proved of such little value does not 

mean that Stalin’s basic policy of neutrality and tough bargaining with 
Germany was misguided, rather that the war took a series of very unexpected 
turns. Given Hitler’s illogical predilections and his success in pulling off 
long-odds military campaigns, Stalin’s strategy was rational to a fault. Stalin 
was, in short, the victim of Murphy’s Law. 


NOTES 

1. Politisches Archiv des Auswartigen Amts (PA)/Nachlasse/Dr. Karl Schnurre, 
A us einem bewegten Leben. Heiteres und Emstes (Bad Godesberg, 1986), 91. See also 
Anthony Read and David Fisher, The Deadly Embrace: Hitler, Stalin, and the Nazi-Soviet 
Pact, 1939-1941 (New York: W. W. Norton & Co., 1988), 349-50. 

2. Donald C. Watt, How War Came: The Immediate Origins of the Second World 
War, 1938-1939 (New York: Pantheon, 1989), 40^41. 

3. For more information on Germany’s raw material shortages on as war 
approached, see OKW/WiRuAmt/Wi, “Die Moglichketien der Versorgung Deutschlands 
und Italiens aus dem neutralen Raum im Fall einer Krieges gegen England und Frankreich 
(und RuCland) (12.5.39),” RW19/3110. 

4. BA/SR/RfW, “Rohstoffversorgung: Moglichkeiten einer GroBraumwirtschaft 
unter deutscher Fuhrung, Teil I (August 1939),” R 25/53, 4. 

5. BA/SR/RfwP, “DerdeutscheAuBenhandelimKriegsfall(Mai 1939 )fR24/82, 

3-5. 

6. BA/SR/RfwP, “Die Einfuhrabhangigkeit der Achse an kriegs- und 
lebenswichtigen Roh- und Halbstoffen und ihre mogliche Sicherstellung im Kriegsfall 
(August 1939),”R 24/21, 1. 

7. BA, R 25/53, 4. 

8. BA, R 24/82, 3-5. 

9. BA, R 25/53, 4. 

10. “Overall Report,” in United States Strategic Bombing Survey, 1945 
(Washington, D.C.: GPO, 1947), 45. 

11. “Effects of Strategic Bombing,” in USSBS, 1945 (WashingtonD.C.:GPO, 1947), 
132. 

12. See Appendix B for more details about Soviet economic demands. 

13. For more information, see IG/Vowi, “Das Transportproblem in der UdSSR im 
Hinblick auf den deutsch-russischen Handelsverkehr (6.10.39),” 80IG 1/A 3725. 

14. Documents on German Foreign Policy, 1918 1945, Series D (Washington D.C.: 
Dept, of State, 1950-), 8: 7, doc. 10, n. 1. 



8 Feeding the German Eagle 


15. Nazi-Soviet Relations, 1939-1941, ed. R. J. Sontagand J. S. Beddie (New York: 
Didier, 1948), 7. 

16. Among these archival sources, the following four document groups are the most 
important: the Wehrwirtschafts- nnd Rustungsamt (War Economy and Armaments Office) 
files at the military archives in Freiburg; the Handakten (personal files) of Emil Wiehl and 
Carl Clodius and the Nachlasse (memoirs) of Karl Schnurre at the Political Archives of the 
Foreign Ministry in Bonn; the reports of the Rufilandausschufi der deutschen Industrie 
(Russia Committee of German Industry) available at a variety of places, including the 
Bundesarchiv (Federal Archives) in Koblenz and the Institut fur Weltwirtschaft (Institute 
for World Economics) in Kiel; and the statistical material found in Der Aufienhandel 
Deutschlands (German Foreign Trade), available in Kiel and elsewhere. 

17. Starting with B. H. Liddell-Hart, The German Generals Talk, 1948 (New York: 
Quill, 1979), this memoir-driven history still pervades many works such as the 
discouragingly popular R. H. S. Stolfi , Hitler’s Panzers East: World War 11 Reinterpreted 
(Norman: University of Oklahoma, 1991). 

18. See Aleksandr Nekrich, "June 22, 1941Soviet Historians and the German 
Invasion, edited by Vladimir Petrov (Columbia: University of South Carolina, 1968), for 
the beginnings of the Soviet debate. 

19. See, for example, Gerhard Weinberg, A World at Arms (New York: Cambridge 
University, 1994), and Militargeschichtliches Forsdmngsamt,DasDeutscheReich undder 
Zweite Weltkrieg, 10 vols. (Stuttgart: Deutsche Verlags-Anstalt, 1979-). 

20. Robert A. Doughty, “Almost a Miracle,” Military History Ouarterly 2, no. 3 
(Spring 1990): 43. 

21. For examples, see The United States Strategic Bombing Survey, edited by David 
Maclsaac, vol. 1 (New York: Garland, 1976); Burton Klein, Germany's Economic 
Preparations for War (Cambridge: Harvard University, 1959); Rolf Wagenftihr, Die 
deutscheIndustrie im Kriege 1939-1945, 2nded. (Berlin: Duncker & Humbolt, 1963); and 
Alan Milward, The German Economy at War (London: Athlone, 1965). 

22. “Overall Report,” in The United States Strategic Bombing Survey, 1945 
(Washington, D.C.: GPO, 1947), 31. 

23. Milward, German Economy, 8. 

24. These recent works include Richard Overy, “Mobilization for Total War in 
Germany, 1939—41 English Historical Review (July 1988): 613-39; Hans-Erich 
Volkmann, “Die NS-Wirtschaft in Vorbereitung des Krieges,” in Ursachen und 
Voraussetzungen der deutschen Kriegspolitik, Vol. 1 of Da.? Deutsche Reich und der Zweite 
Weltkrieg (Stuttgart: Deutsche Verlags-Anstalt, 1979), 117-370; and Ludolf Herbst, Der 
totale Krieg und die Ordnung der Wirtschaft im Spannungsfeld von Politik, Ideologic und 
Propaganda 1939-1945 (Stuttgart: Deutsche Verlags-Anstalt, 1982). For a recent survey 
of this debate, see J. P. Harris, “The Myth of Blitzkrieg,” War in History 2, no. 3 
(November 1995), 348-52. 

25. Overy, Mobilization, 627. 

26. See, for instance. Reinhold W. Weber, Die Entstehungsgeschichte des Hitler- 
Stalin-Paktes 1939 (Frankfurt: P, D. Lang, 1980), or Ingeborg Fleischhauer, Der Pakt. 
Hitler, Stalin und die Initiative der deutschen Diplomatic 1938-1939 (Berlin: Ullstein, 
1990). 

27. Two examples are Barry A. Leach, German Strategy Against Russia, 1939-1941 
(London: Oxford University, 1973), and Robert Cecil, Hitler’s Decision to Invade Russia 
1941 (New York: David McKay, 1975). 



Introduction 


9 


28. For instance, see the appropriately entitled book by Anna Strong, The Soviets 
Expected It (New York: Dial, 1941). 

29. The most recent and famous of these books is by Victor Suvorov, Ice-Breaker: 
Who Started the Second World War?, trans. Thomas B. Beattie (London: Hamish Hamilton, 

1990) . 

30. See Bianka Pietrow, Stalinismus, Sicherheit, Offensive: Das Dritte Reich in der 
Konzeption der sowjetischen Aussenpolitik 1933-1941 (Melsungen: Schwartz, 1983); 
IngeborgFleischhauer, Diplomatische Widerstandgegen “UntemehmenBarbarossa. " Die 
Friedensbemiihungen der Deutschen Botschaft in Moskau 1939-1941 (Berlin: Ullstein, 

1991) ; and Geoffrey Roberts, The Unholy Alliance: Stalin's Pact with Hitler (Bloomington: 
Indiana University, 1989). 

31. For the first two points, see Donald C. Watt, How War Came: The Immediate 
Origins of the Second World War, 1938-1939 (New York: Pantheon, 1989); Max Beloff, 
The Foreign Policy of Soviet Russia, 1929-1941, 2 vols. (New York: Oxford University, 
1947-49); and Gerhard L. Weinberg, The Foreign Policy of Hitler's Germany, 1937-39 
(Chicago: University of Chicago, 1984). For the third motivation, see Tucker’s contribution 
to Robert C. Tucker, et al., “Discussion: The Emergence of Stalin’s Foreign Policy,” Slavic 
Review 36, no. 4 (December 1977): 563-607; and R.C. Raack, “Stalin’s Plans for World 
War II,” Journal of Contemporary History 26 (1991): 215-27. 

32. R.C.Raack , Stalin’s Drive to the West, 1938-1945: The Origins of the Cold War 
(Stanford: Stanford University, 1995), and Geoffrey Roberts, The Soviet Union and the 
Origins of the Second World War: Russo-German Relations and the Road to War, 
1933-1941 (New York: St. Martin’s, 1995), both restate their earlier positions. 

33. For a more focused discussion of this point, see Edward E. Ericson HI, “Karl 
Schnurre and the Evolution of Nazi-Soviet Relations, 1936-1941, "German Studies Review 
21, no. 2 (May 1998): 263-84. 

34. The few pieces that focus on the economic partnership from 1939 to 1941 
include Ferdinand Friedensburg, “Die sowjetischen Kriegslieferungen an das Hitlerreich,” 
Vierteljahrsheftezur Wirtschaftsforschung (1962): 331-38; Gerhard Eichler, Die deutsch- 
sowjetischen Wirtschaftsbeziehungen vom August 1939 biszum faschistischen Uberfall im 
Juni 1941 (Ph.D. diss., Halle, 1965); Wolfgang Birkenfeld, “Stalin als Wirtschaftspartner 
Hitlers (1939-1941),” ViertelfahrsschriftfurSozial- und Wirtschaftsgeschichte 53 (1966): 
477-510; Hartmut Schustereit, “Die Mineralollieferungen der Sowjetunion an das 
Deutsche Reich 1940/41,” Vierteljahrsschrift fur Sozial- und Wirtschaftsgeschichte 67 
(1980): 334-53; and Manfred Zeidler, “Deutsch-sowjetische Wirtschaftsbeziehungen im 
Zeichen des Hitler-Stalin-Paktes,” in Zwei Wege nach Moskau, ed. Bemd Wegner 
(Munchen: Piper, 1991), 93-110. 

35. Heinrich Schwendemann, Die wirtschaftliche Zusammenarbeit zwischen dem 
Deutschen Reich und der Sowjetunion von 1939 bis 1941. Alternative zu Hitlers 
Ostprogramm? (Berlin: Akademie, 1993). 

36. For a more thorough analysis of Schwendemann’s work, see Edward E. Ericson 
III, Feeding the German Eagle: Soviet Economic Aid to Nazi Germany, 1933-1941 (Ph.D. 
diss., Indiana, 1996), 30-38. 

37. Gerhard Weinberg, Germany and the Soviet Union, 1939-1941 (Leiden: E. J. 
Brill, 1954), 75. 



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Chapter 1 


Traditional Interdependence 


Our story begins long before Stalin or Hitler had come to power. As those 
Germans who supported the policy of economic cooperation with the USSR 
repeatedly noted, Germany and Russia were natural economic allies, the one 
possessing first-class industry and the other abundant natural resources. While 
their compatibility politically and ideologically has frequently been debated, 1 there 
is no questioning their economic importance to each other. In 1912, for example, 
Germany imported 1.5 billion Reichsmarks (RM) worth of goods from Russia and 
exported 680 million RM to that country, an astounding 14.3 percent of total 
German imports and 7.6 percent of total German exports. 2 

Since the late nineteenth century, the issue for the Germans had been one of 
means and not ends. Germany clearly needed Russia and its resources. But were 
Germany’s status and prosperity best insured by trade or conquest? Before World 
War I, German leaders such as Bethmann-Hollweg appear to have been of two 
minds on the Russian question. However, once war started, direct control of 
Russian grain, metals, and oil inevitably became a vital goal of German military 
planning. 3 


WORLD WAR I 

Even before the guns of August 1914 had roared to life. Great Britain had 
begun to cut off Germany’s lifeline to the world’s markets when Winston 
Churchill mobilized the British navy in the early morning hours of August 2. As 
Liddell-Hart explains, “the blockade [was] . . . the decisive agency in the 
struggle,” demoralizing the German people and making them feel helpless. 4 He 
goes on to say, “Helplessness induces hopelessness, and history attests that loss of 



12 Feeding the German Eagle 


hope and not loss of lives is what decides the issue of war.” 5 

When the Von Schlieffen Plan came up short and the armies on the Western 
Front had become mired in bloody trench warfare, the only real German hope of 
victory was the defeat of Russia. Success here could secure Germany from the 
effects of the blockade and perhaps even enable her to gather enough strength to 
break the siege in the West. Unfortunately for the Central Powers, this plan was 
too long in the making and too poorly executed. Although Russia did eventually 
collapse, Germany proved incapable of quickly harnessing the needed resources. 
England’s “Empire Jack” managed to torch the Rumanian oil fields in mid- 
October 1916 ahead of the invading Central Power armies, while the British beat 
the Germans to the Baku oil fields in August of 1918. 6 Efforts to feed Germany 
from the Ukrainian breadbasket proved equally ineffectual. From an area that had 
previously exported an average of five million tons of grain a year, Germany was 
able to secure less than one million tons in 1918. 7 With its economy in shambles 
and the Allied armies approaching, Germany gave up the fight in November 1918. 

THE “HAVE-NOTS” HAVE EACH OTHER, 1919-27 

This first disastrous attempt to dominate instead of trade with the Russian 
colossus should have chastened those who had harbored expansionist aims in the 
east. Such, however, was not the case. German military leaders were successfully 
able to sidestep the issue of their responsibility for losing the war and to put much 
of the blame on the new political leadership. Consequently, many nationalist- 
conservative leaders continued to nourish the belief that German national security 
required eventual control of the now-Soviet economy. Rolf-Dieter Muller and 
other historians, therefore, have asked the logical question: “Were there not in the 
economic and armament policies of the Weimar Republic such extensive, genuine 
power-political aims to make it necessary to describe the economic revisionism 
and military policy of the Twenties as a preliminary step to the aggressive- 
expansionist course of the Nazi leadership?” 8 

Although this argument can be all too easily exaggerated. Hitler’s anti- 
Bolshevik rhetoric did trumpet many of the same concerns voiced by these 
nationalist elites, despite their frequent distaste for Hitler’s racialist and anti- 
semitic propaganda. Hitler, too, believed that Germany’s national security and 
potential world-power status required it to have a secure resource base. Or, as he 
put it in Mein Kampf “Germany will either be a world power or there will be no 
Germany.” 9 

To achieve this aim, there were, from Hitler’s perspective, two possible 
courses: control of sea lanes to a colonial empire (as in the British case) or control 
of a land empire (as in the case of the United States or the USSR), which, for 
Germany, could only be found to the east. The cardinal German error in World 
War I, therefore, had been to lose simultaneously both of these raw material bases. 

For Hitler the future choice was clear. Russia must become German 
Lebensraum. And so he wrote in 1925, “At long last we break off the colonial and 



Traditional Interdependence 13 


commercial policy ofthe pre-War period and shift to the soil policy of the future .” 
However, “if we speak of soil in Europe today, we can primarily have in mind only 
Russia and her vassal border states.” Consequently, “if before the War we could 
have choked down every possible sentiment and gone with Russia, today it is no 
longer possible,” because “the conclusion of an alliance with Russia embodies a 
plan for the next war. Its outcome would be the end of Germany.” 10 

There has, of course, been endless debate about how to interpret these 
professed goals of eastern Lebensraum. A. J. P. Taylor claimed that they were just 
“day dreams.” Others have seen them as practically a lock-step plan. 11 However, 
most historians have accepted Alan Bullock’s explanation that “Hitler’s foreign 
policy... combined consistency of aim with complete opportunism in method and 
tactics.” 12 In other words, the conquest of Russia as the basis for world power 
would remain Hitler’s constant aim, but the tactic of rejecting any alliance with 
the Soviet Union, no matter how temporary, could be modified depending on 
circumstances. 

These plans for domination of Russia, however, were not official German 
policy during the 1920s. In fact, the Weimar government preferred to reestablish 
its trade relationship with the Soviet Union as a w'ay of bolstering its economy and 
also gaining some political leverage over the victorious Allies. Even this policy, 
however, did not develop overnight. At first, German views of the USSR were 
mixed at best, and German-Soviet contacts were limited. Edward Carr offers this 
prescient British assessment of the situation in the summer of 1919: 

All classes in Germany are looking towards Russia for one reason or another. The 
extremists of the Left look upon her as the realization of their own political ideals; the pan- 
Germans look upon her as providing the only possible outlet for surplus population and 
compensation for the loss of colonies. Officers think that she may provide employment, 
which is no longer possible in their own country. Industrialists think that she will provide 
employment for capital and ultimately be the means of paying off the war indemnity. The 
realization of these ideas, however, lies in the far future, and, for the present, 
communication is much too difficult to make any practical steps possible. 13 

But this confused situation began to clarify itself as the governments in both 
Germany and the USSR solidified their internal positions. Their mutual political 
opposition to the Treaty of Versailles and their natural economic compatibility 
combined to draw the two sides closer together, as evidenced by the commercial 
treaty of May 1921 and the Rapallo Agreements of April 1922. 

This new relationship, however, “did not bring with it a definite swing of 
German foreign policy away from the West and toward a firm alliance with Soviet 
Russia.” 14 In fact, both sides continued their diplomatic and economic contacts 
with other powers, “constantly asking themselves who would be the first to sell the 
partner down the river by making a deal with Poland. England, or France.” 15 

The negotiations leading up to the signing of a cluster of economic treaties on 
October 12, 1925, were a good indication of the fragility of this relationship. Both 
sides needed to have a successful resolution of the talks, but “the Germans were 



14 Feeding the German Eagle 


mainly interested in material results, whereas the Russians had their eye 
principally on the tactical advantages that might be gained.” 16 Consequently, the 
negotiations were long and difficult, and neither side was very happy with the final 
100 million RM in short-term credits offered to the USSR. To rectify this problem, 
a novel formula was agreed to in Februaiy 1926 that provided 300 million RM in 
longer-term credits backed by the German government to 35 percent. 17 This new 
system became the model for future credit arrangements with ever-increasing 
percentages guaranteed by the German government. 

These economic agreements were also intended, in conjunction with the April 
2, 1926, Treaty of Berlin, to allay Soviet concerns about the October 16, 1925, 
Locarno Treaty and to allow Stresemann, Germany ’ s Foreign Minister, to continue 
his policy of playing the US SR and the West against each other to German benefit. 
Nevertheless, these economic arrangements did foster a growing trade relationship 
that saw imports from the USSR reach 433 million RM and exports reach 330 
million RM in 1927, both post-war highs. 18 

THE FIRST FIVE-YEAR PLAN, 1928-32 

During the next four years, the political relationship began to deteriorate as 
the more isolationist Stalinist regime asserted its power in the USSR, and as “the 
Allied decision to abandon military control. . . [made] Germany less dependent 
on Russia and to this extent strengthened] the hand of German foreign policy.” 19 
The economic relationship, on the other hand, continued to grow. The 
Schicksalgemeinschaft (Community of Fate) had become a “marriage of 
convenience.” 20 But increased trade was, coincidentally, just such a convenience, 
due in part to the new treaty structure that made trade easier. Ironically, the Great 
Depression also fostered improved German-Soviet economic relations because 
German firms were increasingly desperate to find customers anywhere, even in 
markets such as the USSR, which, “during the years of prosperity, German 
business had tended to regard ... as a risky undertaking made difficult by petty 
formalism, tiresome bargaining, and an annoying fear of responsibility on the part 
of the Soviet negotiators.” 21 

Even more important than German export requirements was increased Soviet 
demand resulting from the implementation of the first Soviet Five-Year Plan. This 
demand pushed overall Soviet imports from almost 2.5 billion Rubles in 1926-27 
to 3.85 billion Rubles in 1931 and imports from Germany from 563 million Rubles 
to 1431 million Rubles during the same period. In fact, by 1932, 46.5 percent of 
all Soviet imports came from Germany! 22 

New economic treaties merely tried to keep pace with this surging Soviet 
demand: the Arbitration Treaty of January 25, 1929, which set up a bipartisan 
arbitration board; the Pyatakov Agreement of April 14, 1931, which provided for 
another 300 million RM credit to the USSR; the May 28, 1932, Tariff and Toll 
Treaty, which allowed easier Soviet access to the German market; and another 



Traditional Interdependence 15 

credit treaty on June 15, 1932, this time with 60 percent government backing (up 
from 30 percent in 1926). 

Despite this expanded trade and new economic arrangements, “the impression 
remains of a slow deterioration of relations punctuated by rather frenzied attempts 
to pretend that all was well.” 23 The Soviets had needed industrial goods for the 
Five-Year Plan, and German firms had needed markets, especially the small- and 
medium-sized German companies for which “the Russian contracts [had] often 
meant their last salvation.” 24 That these German firms could survive the 
Depression to later produce weapons and machines for the Nazi invasion of the 
USSR was a completely unforeseen consequence. Conversely, these German 
industrial shipments would later help the US SR produce weapons to repel this very 
attack. 

PAYING FOR THE FIRST FIVE-YEAR PLAN, 1933-34 

Contrary to the common wisdom that “trade is a natural barometer of relations 
between countries, and the figures for trade between the Soviet Union and 
Germany are particularly revealing,” 25 trade and politics often went their separate 
ways from 1928 to 1932. The same holds true for much of the Nazi era. Looking 
only at the German-Soviet trade numbers, one would initially assume that the Nazi 
entry into power in January 1933 had completely altered the economic 
relationship. Imports from Germany plummeted from 1142 million Rubles in 1932 
to 100 million Rubles in 1934! 26 Coupled with the ongoing “long-range oratorical 
bombardment” emanating mostly from Germany, 27 many historians have 
concluded that “the ideological strife had first of all liquidated the economic 
relationship.” 28 

Upon closer examination, however, the picture becomes less clear. The 
political relationship certainly did decline, from the German side in particular, but 
neither power was particularly eager to sever all ties in the first two years of 
Hitler’s regime as evidenced by the renewal of the Berlin treaty in May 1933, a 
step the Weimar government had been unable to take in the two preceding years. 
Hitler’s motivation in following this noncommittal policy seems fairly 
straightforward: “Until German military power had been restored, he had no 
reason or wish to bring about an open rupture with Russia—or, on the other hand, 
to let relations become too close.” 29 

Stalin’s thinking at this time has been the subject of more debate. 30 Was he 
mainly being defensive, as Geoffrey Roberts argues? 31 Was he instead following 
a dual policy with “a foot in each camp,” hoping to continue the earlier successful 
military and economic relationship with Germany while disregarding the political 
shadings of the German government just as he disregarded the Fascist label in 
Italy? 32 Or did Stalin have more revolutionary, ideological motivations when his 
Moscow-led German Communist Party helped destroy the Weimar Republic and 
when Stalin then allowed the German Communist Party to be liquidated by the 
Nazis? 33 In any case, Stalin felt the need for more freedom of maneuver in this 
more volatile era. 



16 Feeding the German Eagle 

But there were also other pressures on the Soviet system. The Soviets had 
extended their credits as far as they could, and now “pay-back” time had arrived. 
Consequently, the Soviet Union would spend the next two and a half years digging 
itself out of the financial debt it had incurred over the previous four. And with no 
other state was the Soviet deficit as high as the 1.2 billion RM that the USSR owed 
to Germany in 1933. 34 This meant that no matter what political course Stalin may 
have wanted to follow in regard to the Third Reich, diminished trade (and 
diminished imports from Germany in particular) would be inevitable. 

From the German side also, the trade relationship was changing, due 
primarily to nonpolitical factors. As the German economy began to improve and 
as the Nazis began their rearmament programs, German businesses had more 
opportunity to sell at home and less incentive to send industrial goods to the Soviet 
Union. On the other hand, German demand for raw materials was increasing as 
various autarky measures were initiated. For example, Reichsbank President 
Hjalmar Schacht introduced a pure nickel currency whose only real purpose could 
be stockpiling in case of a prolonged conflict. John Perkins asserts that “Clearly, 
by the early 1930s some German leaders were planning for a major war.” 35 Other 
examples of raw materials that would be in short supply in such a struggle were 
manganese, oil, and rubber, 36 exactly the resources that the Soviets either had large 
reserves of or could buy for the Germans from third parties. 

So both Germany and especially the Soviet Union had overriding economic 
reasons quite apart from their political relationship for reducing shipments from 
Germany while maintaining deliveries to Germany. 37 Consequently, while a 
number of new economic agreements were concluded (such as the February 25, 
1933, bridge credit and an even larger bridge credit on March 20, 1934, at 70 
percent government backing), Soviet imports from Germany continued to drop 
even faster than the general decline in Soviet imports. 38 At the same time, Soviet 
exports and gold payments to the Reich remained at relatively high levels from 
1933 to 193 5, 39 so that by the beginning of 1936, the USSR had paid off almost its 
entire debt to Germany. 

While recognizing the true causes of the new trading pattern, a number of 
German officials were increasingly concerned that the entire German position in 
the U S SR might become mired in inaction. During his short-lived ambassadorship 
to Moscow, for example, Nadolny noted on December 11,1933, that “the decisive 
reasons why the volume of orders to German industry declined this year to a 
minimum of a few million marks a month must be sought ... in the general 
economic situation of the USSR.” 40 However, he also warned that “the sooner we 
realize the fact that the Soviet market can no longer be kept and re-captured solely 
with merchandise credits and Reich guarantees against loss, the better for us.” 41 

Such a change in attitude, however, was not forthcoming. Instead, Germany 
left its Soviet economic policy on hold and continued its rearmament measures, 
albeit in the form of “a great, sprawling machinery . . . without any driver.” 42 By 
early 1934 Schacht was already facing a critical shortage of foreign credits, 
without which Germany could not purchase crucial raw materials. 43 Schacht’s 
September 1934 currency plan to increase barter trade through clearing accounts 



Traditional Interdependence 17 


could be no more than a temporary solution. 

At the same time that Germany was moving further away from Russia with 
the signing of the German-Polish Non-Aggression Pact of January 26, 1934, and 
was losing its claims to Soviet resources as the USSR paid off its debt, its demands 
for Soviet raw materials were increasing. Clearly, the economic balance of power 
between the two countries was changing. Hitler seems to have sensed his 
increasing need for Soviet political and economic support when he lamented in the 
spring of 1934, “Perhaps I shall not be able to avoid an alliance with Russia.” 44 


THE NEW ECONOMIC ORDER, APRIL 9,1935 

Despite the concerns expressed by Nadolny and even Hitler himself, the 
pattern of German-Soviet relations in the second year of the Thousand-Year Reich 
continued along much the same lines as they had in the first year. The Soviets 
made repeated efforts to reestablish closer contacts with Germany, which, 
according to some observers, became more energetic after Hitler tightened his grip 
on power with the Night of the Long Knives (June 20, 1934) and displayed the 
sort of ruthlessness that impressed even the man who had already starved to death 
millions in the Ukraine. Stalin’s interpreter, Valentin Berezhkov, for instance, 
quotes the Vozhd as having exclaimed shortly after the June purge, “Have you 
heard the news from Germany? About what happened, how Hitler got rid of 
Rohm? Good chap that Hitler! He showed how to deal with political opponents!” 45 
Whether such stories are true or not, Hitler pretended not to notice these Soviet 
approaches, and the political relationship continued its downward slide, with the 
Soviet Union signing a series of nonaggression and mutual assistance pacts with 
neighboring states, as well as joining the League of Nations in September 1934. 

The economic relationship continued its parallel but mostly independent path, 
dominated by the Soviet desire to repay its old debt and the German plans to 
rearm. Gustav Hilger explains that “the political enmity of the two countries was 
so much taken for granted that trade relations were now removed from the realm 
of controversy and could be discussed with an amount of detachment that made for 
far greater efficiency.” With Hitler’s four-year plans creating shortages of various 
items that the USSR was particularly well situated to supply, however, it was now 
“Germany [that] was quite dependent on Russian business.” 46 So, while the Soviets 
were the ones pursuing better political relations, the combination of Soviet 
repayment and German rearmament was giving the USSR the upper hand in the 
economic negotiations. 

The discussions leading up to the April 9, 1935, credit treaty make this point 
very clear. The two sides had been haggling over a new 200 million RM credit for 
months, with the primary sticking point being the duration of the credit. Four 
years was the maximum that the German Ministry of Economics was willing to 
go, whereas the Soviets demanded no less than five and a half. By August 18, 
1934, the Germans said they were “willing to compromise,” but the Soviets 
refused to budge, 47 and by November 27 the Germans were complaining to the 
Soviets “that the negotiations concerning the two hundred million [Mark] project 



18 Feeding the German Eagle 


were not making any progress and that there had been no one in charge of the 
Trade Delegation for a number of months now.” 48 

By this time, however, Hjalmar Schacht, now the Acting Minister of 
Economics, had entered the fray and by February 12 had informed David 
Kandelaki, the head of the Soviet trade delegation in Germany and rumored close 
personal friend of Stalin, “that the list of requirements which he [Kandelaki] had 
handed to the Reich Ministry of Economics in January could not form part of an 
inter-State treaty, . . . that the Germans reserved the right to delete certain items 
of special equipment from the list, [and] that imports from the Soviet Union would 
in the future be subject to the German import control system.” The Soviets became 
“indignant” at Schacht’s demands (whose result would be much higher Soviet 
gold shipments than previously planned), and Kandelaki promptly headed back 
to Moscow. 49 On February 14, Schacht then informed Deputy Head of the Soviet 
Trade Delegation Friedrichson that “it was no longer acceptable that the Soviet 
Union should have a special position with regard to the importation of its goods 
into Germany. Under the ‘New Plan,’ Soviet imports, too, must be controlled by 
the supervisory authorities.” Friedrichson replied “that the President’s statement 
meant a severe blow for the Soviet Union,” to which Minister Schacht merely 
declared that “he had full confidence in the Soviet Union’s solvency and desire to 
pay.” 50 

While these new German demands were primarily just another part of 
Schacht’s currency system, they bore little relationship to the developing trade 
situation with the USSR. As Otto Brautigam, an official in the Economic Policy 
Office of the Foreign Ministiy, already noted in the February 14 report, “These 
statements by President Schacht are in contradiction to the negotiations which 
Ministerialdirektor Heintze of the Ministiy of Economics has been conducting 
with the Soviet Trade Delegation for the last nine months. . . . This means a 
completely new basis for negotiation.” 51 A February 22 meeting between Schacht 
and the just-returned Kandelaki failed to resolve the differences, 52 and over the 
following weeks the Soviets continued to complain that they “cannot understand 
the severe action which President Schacht is taking against them.” 53 

In Brautigam’s opinion, the all-but-signed 200 million RM credit agreement 
and Russo-German economic relations in general were being “completely 
paralysed simply in order to uphold a principle.” 54 On the other hand, “even if the 
Russians do accept the arrangements made by President Schacht,” Brautigam 
warned, “it stands to reason that under the ‘New Plan’ the Russians will keep back 
those goods which are of primary economic importance to Germany, on the 
assumption that they will receive payment for these goods in free Reichsmark.” 55 

With Hitler renouncing the Treaty of Versailles and beginning official 
rearmament on March 16, 1935, the President of the Reichsbank had few other 
options to supply the expanding German war economy except to convert German 
trade to more of a barter system. If the Soviets stayed out, then other countries 
would pull back and the whole plan might fail. So Schacht wanted to press 
forward regardless of Brautigam’s and others’ warnings that his demands could 
disrupt the vital German-Soviet economic relationship and that the “New Plan” 



Traditional Interdependence 19 


could even backfire if applied to the USSR. 

Interestingly, the subsequent economic agreements followed Soviet proposals 
more than those of the Germans. The sixteen-pag cAllgemeine Lieferbedingungen 
fur Lieferungen aus Deutschland nach der UdSSR (General Supply Terms for 
Shipments from Germany to the USSR) was finally signed on March 20, 1935, 
after four years of difficult negotiations. The Germans, under the leadership of the 
Russia Committee for German Industry, had been the main proponents of the 
treaty as a means of promoting German exports to the USSR and were frustrated 
by the incredibly long time it took to reach an agreement. Furthermore, in the 
opinion of many German businessmen, the treaty’s arbitration procedures were 
unusually harsh and immediately became the subject of long-running discussions 
that finally resulted in somewhat easier terms in December 1939. Instead of 
fostering more German exports to the USSR, therefore, the treaty had something 
of the opposite effect, scaring off German business afraid of becoming entangled 
in legal wranglings with Soviet officials. 56 

The 200 million RM credit treaty that was finally signed on April 9, 1935, 
after continuing difficulties, did resolve a series of outstanding questions but also 
kept Soviet gold shipments at 100 million RM for 1935, 57 left the question of 
future Soviet raw material shipments open, and only required 60 million RM in 
“current business” orders in 1935. 58 In reference to these results, a Foreign 
Ministry circular of April 10, 1935, lamented the poor performance of the “New 
Plan” and specifically mentioned the USSR as a country which had been able to 
force through economic agreements on its own terms because it possessed raw 
materials that Germany desperately needed. 59 


NOTES 

1. See, for example, Edward H. Carr, German-Soviet Relations Between the Two 
World Wars, 1919-1939, 1951 (New York: Harper and Row, 1966), for the argument that 
the two countries were natural allies and Walter Laqueur, Russia and Germany: A Century 
of Conflict (Boston: Little, Brown, 1964), for the view that the two were traditional 
enemies. 

2. See Appendix A, Tables 1.1 and 1.2. 

3. For a general overview of Germany’s evolving expansionist ideology, see 
Woodruff Smith, The Ideological Origins of Nazi Imperialism (New York: Oxford 
University, 1986). 

4. Liddell-Hart, The Real War,1914-1918, 1930 (Boston: Little, Brown, 1964), 

471. 

5. Liddell-Hart, The Real War, 472. 

6. For Germany’s oil needs in World War I, see Daniel Yergin, The Prize: The 
Epic Quest for Oil, Money, and Power (New York: Simon and Schuster, 1991), 172-83. 

7. BAMA/OKW/WiRilAmt/Stb/Varain, “Die landwirtschaftliche Produktion der 
Ukraine vor und im Weltkrieg 1914/18 (13.2.41),” Wi/ID.38 , 3, 7, & 21. 

8. Rolf-Dieter Muller, Das Torzur Weltmacht: Die Bedeutung der Sowjetunion fiir 
die deutsche Wirtschafts- und Rustungspolitik zwischen den Weltkriegen (Boppard: Boldt, 
1984), 8. 



20 Feeding the German Eagle 


9. Adolf Hitler, Mein Kampf 1925, trans. Ralph Manheim (Boston: Houghton 
Mifflin, 1971), 654. Emphasis is in original. 

10. Hitler, Mein Kampf, 654, 660, & 663. 

11. See, for instance, the documents and discussion in Jeremy Noakes & Geoffrey 
Pridham, eds.. Foreign Policy, War and Racial Extermination , vol. 2 of Nazism, 
1919-1945: A Documentary Reader (New York: Schocken, 1988), 750-54. 

12. Alan Bullock, “Hitler and the Origins of the Second World War,” in European 
Diplomacy Between the Two Wars, 1919-1939, ed. Hans Gatzke (Chicago: Quadrangle, 
1972), 224. 

13. As quoted in Carr, German-Soviet Relations, 12-13. 

14. Gustav HilgerandAlfredG. Meyer, The Incompatible Allies: A Memoir-History 
of German-Soviet Relations, 1918-1941 (New York: MacMillan, 1953), 80. 

15. Hilger and Meyer, 152. 

16. Hilger and Meyer, 182. 

17. For the economic relations in the mid-1920s, see Robert H. Haigh, et al., 
German-Soviet Relations in the Weimar Era (Totowa, NJ: Barnes & Noble, 1985), 132-36. 

18. See Appendix A, Tables 1.1 and 1.2. 

19. Carr, German-Soviet Relations, 96. 

20. This is the word Rantzau, the German Ambassador to Moscow in the mid-1930s, 
coined to describe the Rapallo relationship. 

21. Hilger and Meyer, 236. 

22. See Appendix A, Table 1.3. 

23. Carr, German-Soviet Relations, 101. 

24. Manfred Pohl, Die Finanzierung der Russengeschafte zwischen den beiden 
Weltkriegen. Die Entwicklung der 12 grofien Rufilandkonsortien (Frankfurt: Fritz Knapp, 
1975), 48. 

25. Read and Fisher, 47. 

26. See Appendix A, Table 1.3. 

27. Beloff, 1:94. 

28. Birkenfeld, Wirtschaftspartner, 479. 

29. AlanBullock, Hitler and Stalin: Parallel Lives (New York: Knopf, 1991), 520. 

30. For a short summary of the differing arguments, see Paul Raymond, “Witness 
and Chronicler of Nazi-Soviet Relations: The Testimony of Evgeny Gnedin (Parvus),” The 
Russian Review 44 (1985): 379-80. 

31. Roberts, The Unholy Alliance, 43. 

32. James McSherry, Stalin, Hitler and Europe, 2 vols. (New York: New World, 
1968-70), 1: 55. 

33. George F. Kennan, Russia and the West Under Lenin and Stalin (Boston: 
Mentor, 1960), 274-75. See also Tucker, 582-84. 

34. Dean Scott McMuny, Deutschland undSowjetunion 1933-1936(Koln: Bohlau, 
1979), 424. 

3 5. John Perkins, “Coins for Conflict: Nickel and the Axis, 1933-45,” The Historian 
55, no. 1 (Autumn 1992): 100. 

36. Klein, 28-34. 

37. For further analysis of this argument, see McMurry, 425-26; Karl Helmer, “Der 
Handelsverkehr zwischen Deutschland und der UdSSR in den Jahren 1933-1941,” in vol. 
13 of Berichte des Osteuropa-lnstituts (Berlin, 1954), 2-5; and Werner Beitel and Jurgen 
Notzold, Deutsch-sowjetische Wirtschaftsbeziehungen in derZeitder Weimarer Republik 
(Baden-Baden: Nomos, 1979), 198. 



Traditional Interdependence 21 


38. See Appendix A, Table 1.3. 

39. See Appendix A, Table 1.4. 

40. DGFP, C, 2: 203-1, doc. 119. 

41. DGFP, C, 2: 206, doc. 119. 

42. Berenice Carroll, A Design for Total War: Arms and Economics in the Third 
Reich (The Hague: Mouton, 1968), 86. 

43. Carroll, 87. 

44. Quoted in David Dallin, Soviet Russia’s Foreign Policy, 1939-1942 , trans. Leon 
Dennen (New Haven: Yale University, 1942), 21. 

45. As quoted in Christopher Andrew and Oleg Gordievsky, KGB: The Inside Story 
(New York: HarperCollins, 1990), 234. 

46. Hilger and Meyer, 283. 

47. DGFP, C, 3: 366-67, doc. 181. 

48. DGFP, C, 3: 683-84, doc. 359. 

49. DGFP, C, 3: 960, doc. 505. 

50. DGFP, C, 3: 935, doc. 494. 

51. DGFP, C, 3: 935-36, doc. 494. 

52. DGFP, C, 3: 960-61, doc. 505. 

53. DGFP, C, 3: 1002, doc. 529. 

54. DGFP, C, 3: 1002, doc. 529. 

55. DGFP, C, 3: 1000-1, doc. 529. 

56. For more details about this treaty and its legal implications, see F. Krahe, 
Allgemeine Lieferbedingungen fur Lieferungen aus Deutschland nach der UdSSR (Berlin: 
Heymann, 1935). 

57. This 100 million RM was half of the remaining 200 million RM debt from the 
original 1.2 billion RM total in 1933. 

58. DGFP, C, 4: 28-29, doc. 20. 

59. DGFP, C, 4: 41, doc. 22. 



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Chapter 2 


Failed Economic Partnership 


Despite the potential problems in the two recent economic treaties and the growing 
Soviet economic leverage over the Reich, German officials remained hopeful about 
the prospects for a renewed German-Soviet economic partnership. The new 
agreements had been successfully concluded, the Soviet Union still seemed 
interested in closer political ties, and Hjalmar Schacht had finally been converted 
to the view that expanded credits to the USSR were necessary if Germany wanted 
to receive more of the increasingly vital Soviet raw materials. These hopes, 
however, were continually dashed on the twin rocks of Hitler’s hesitancy and the 
superior Soviet economic bargaining position. 


FIRST FAILURE: SCHACHT’S PLAN, APRIL 29,1936 

The first to try his hand at establishing a new German-Soviet economic 
partnership was President of the Reichsbank and Acting Minister of Economics 
Hjalmar Schacht. Having thrown so many wrenches into the earlier credit 
negotiations, Schacht now changed course and decided that Germany’s growing 
shortages in raw materials and the Reich’s dwindling foreign-currency reserves 
required concessions to the Soviet Union as the one state that could supply the 
needed goods and might not demand hard currency but actually prefer to barter. 
Consequently, Schacht sounded out Kandelaki about the possibility of the 
Germans providing 500 million RM in credits. 1 The counterdeliveries for these 
extensive credits would have solved many of Germany’s resource difficulties 
without overly burdening the Reich’s hard-currency stocks. 

Such obvious economic support for Germany also implied some sort of 
political reconciliation in which the Nazis would tone down their anti-Communist 



24 Feeding the German Eagle 


rhetoric, publicly accept the Soviet Union as a legitimate state, resolve various 
diplomatic disputes, and so forth. Kandelaki was quick to make this point upon his 
return from consultations in Moscow. The Soviets were certainly willing to accept 
the credits, but “after some embarrassment” explained that they wanted to wait 
until after the earlier 200 million RM agreement had been completed in 1936 or 
later. In the meantime, they suggested that German-Soviet political relations could 
be improved. Schacht replied “that we had indeed already previously agreed that 
a brisk exchange of goods would be a good starting point for the improvement of 
general relations, but that I was not able to enter into political negotiations.” 2 

And there the matter lay. The Germans wanted access to Soviet resources 
without using hard currency. The Soviets wanted to use this leverage to gain 
political concessions in addition to good economic terms, a price Hitler was 
unwilling to pay. 3 So while the Soviets continued their occasional contacts to 
improve political relations, the Germans kept their distance. 

These Soviet soundings intensified in October as the French-Soviet Pact 
encountered some problems. Assuming, in good Marxist-Leninist fashion perhaps, 
that the head capitalist in Germany would probably also be the real person in 
charge, Kandelaki brought up the issue of closer political and diplomatic relations 
again with Schacht during the resumed economic discussions. In their October 30 
meeting, Schacht returned to the 500 million RM credit idea for much the same 
reasons as he had before. 4 And the Soviets once again highlighted the political 
implications of such an arrangement as they probed the issue with German 
officials at various levels over the next month. They also asked to buy weapons 
and high-technology items under the new credit plan, goods that the Germans 
were hesitant to supply. As Gerhard Weinberg explains, “The Russian requests for 
militaiy equipment within the trade agreement framework as well as the long-term 
character of the trade credit both—perhaps intentionally—gave the trade 
negotiations a political aspect that Hitler, it soon became evident, did not want. 
The negotiations, therefore, were allowed to continue indecisively.” 5 

Eventually, Molotov’s indiscrete mentioning of the negotiations during a 
public speech in January was used as an excuse to scale back the credit 
discussions, much to the surprise and dismay of the Soviets. 6 After some difficult 
negotiations and Soviet stoppages of oil shipments, the two sides reached a much- 
reduced, status-quo agreement on April 29, 1936, which provided only for short¬ 
term clearing accounts to circumvent the strict currency regulations that were 
discouraging foreign trade. 7 


SECOND FAILURE: GORING’S PLAN, DECEMBER 24,1936 

Only two weeks after Schacht’s efforts to solve Germany’s growing economic 
problems had reached their disappointing conclusion, another German leader was 
eyeing the Soviet market—Hermann Goring. The reasons for Goring’s increasing 
interest in the matter were many: the German raw-material and currency situation 
had continued to worsen as rearmament intensified; 8 the April 29,1936, treaty had 



Failed Economic Partnership 25 


given the Soviets even less incentive to export vital goods to Germany; 9 the 
international situation had deteriorated, especially with Hitler’s reclaiming of the 
Rhineland in March; 10 and the coming Four-Year Plan would soon put Goring at 
the head of all efforts to solve Germany’s resource crisis. 

On May 13, 1936, Goring made his first move by meeting with Soviet trade 
delegates Kandelaki and Friedrichson. In attendance was Goring’s cousin Herbert, 
the official in the Reich Ministry of Economics who had promoted the meeting 
and who would serve for the next eight months as the main coordinator for 
German economic approaches to the USSR. Herbert Goring described the meeting 
to Count Schulenburg, German Ambassador to the Soviet Union, as follows: 

Their visit to the Colonel General passed off in a very pleasant and almost friendly way, 
and Kandelaki and Friedrichson were in every respect delighted by the Colonel General’s 
charming manner. ... It seems to me particularly important that, as I myself was witness, 
[Hermann] Goring suggested to the Russians that if ever they had any wishes with which 
they were making no headway they should apply to him direct; he was prepared at all times 
to assist by word and deed. This naturally constituted a considerable success for the 
Russian gentlemen.... After this very friendly conversation the ice did seem to me to have 
been to some extent broken. 11 

The future Reichsmarshall continued his promotion of an economic 
arrangement with the USSR when he met with German industrialists a few days 
after the Kandelaki conversation and promised them that he would bring up the 
subject with Hitler. 12 Whether he actually kept this promise is unclear. The 
summer dragged along with no real action on either side of the economic-relations 
issue. The Soviets had no particular reason to give away their superior economic 
bargaining position, and Hitler seems to have looked to the stop-gap measures of 
the Four-Year Plan to deal with Germany’s raw material needs until such time as 
Germany could actually conquer the required territory. 13 

But the Four-Year Plan would take time to implement and would actually 
make Germany even more dependent in the short term on obtaining resources 
from a reluctant Soviet Union. 14 A September 12 memorandum from Karl 
Schnurre, an ambitious, up-and-coming diplomat who would later be the primary 
German negotiator in economic relations with the USSR, laid out the German 
thinking. Since the April 26,1936, treaty contained “no obligation whatsoever for 
the Russians to supply us with raw materials in the quantities desired by us,” and 
since “no concrete programme has been laid down for current orders to be placed 
by the Russians in Germany either, ... the exchange of goods under the 
Agreement . . . [has] been extremely meagre.” Schnurre wanted the 1937 
agreement to remedy these defects, but admitted that “the prospects of success in 
both matters are extremely poor.” 15 

The problems were the same as before. The Germans desperately needed the 
resources, but Hitler was unwilling to pay the high Soviet price of political 
reconciliation and military shipments, especially when the Soviet economic 
negotiators were likely to haggle over every detail and drag out the discussions to 



26 Feeding the German Eagle 


such an extent that whatever Russian shipments did arrive would come too late to 
help solve the immediate raw material crisis. Of course, continuing the old 
agreement was still better than no treaty structure at all, since the Russians had 
other potential customers for their goods, such as the United States and Great 
Britain, and the Germans could ill afford to lose even the reduced amounts they 
were currently receiving. 16 But these limited shipments would be small comfort to 
the new Head of the Four-Year Plan as he tried to find a way around the 
expanding bottlenecks. 

When the Soviets made one of their usual soundings in the fall of 1936, the 
Gorings took the opportunity in the October discussions to press the German 
economic case regarding renewal of the 1936 treaty. By October 3, Hermann 
Goring was telling German businessmen that he wanted “to do business with the 
Russians at all costs,” and by October 12, Kandelaki was hinting that a deal was 
in the works that would allow the Germans to import manganese in return for 
exporting armor plate and aircraft catapults. 17 In a meeting with Schnurre, Herbert 
Goring explained his plan as follows: 

It was recognized in authoritative quarters that the raw materials situation and the progress 
of German rearmament were such as to make us dependent on procuring Russian raw 
materials. It was therefore necessary to get German-Russian economic relations out of their 
present deadlock. 'Hie precondition for this was that business with Russia should be 
rendered completely non-political. This was the task which Colonel General Goring had 
assigned to him [Herbert]. The purpose of this assignment was to centralize German- 
Russian economic questions in his hands, in order to avoid the Russians approaching every 
possible authority, as they have done hitherto, and then playing them off one against the 
other. 18 

In the course of this meeting, however, Schnurre noted that Herbert had left out 
the key question of the contractual relations for 1937. It was fine for both sides to 
make vague promises of bartering various goods, but these had to be fit into an 
overall framework. 

While Herbert Goring agreed that he needed to work further with Schnurre 
and others in bringing such an agreement about, the course of the negotiations 
over the next two months was disappointing. Whether or not Stalin had decided 
to reach a deal with Hitler at this point, as some have argued, 19 Hitler was still 
unwilling to commit himself and lose his anti-Soviet propaganda card. 
Consequently, the larger goals were once again dropped, and a simple extension 
of the April 29, 1936, treaty for the year 1937 was agreed to on December 24, 
1936. 20 

THIRD FAILURE: THE PURGES, MARCH 1,1938 

Although in his January 6 memorandum on the treaty German Ambassador 
on Special Assignment Karl Ritter had emphasized the value of having this 
framework agreement in place before the previous one ran out, he nevertheless 



Failed Economic Partnership 27 


argued that this increasingly important German-Soviet trade would probably 
continue to shrink unless German-Soviet political relations were improved first. 
While doubtful that such a change would occur, Ritter was even less enthusiastic 
about the alternatives. Herbert Goring’s policy of trying to put the economic 
relationship on a completely nonpolitical basis was sputtering to a fruitless 
conclusion, and the old standby of offering new credits would now probably take 
away what little incentive the Soviets currently had to send raw materials to 
Germany in the short term. 21 

Russia Committee Business Manager Tschunke argued similarly in a March 
18 circular that “for the time being, imports of vital Russian raw materials are of 
substantial importance.” However, because “the entire world was scrambling for 
these Soviet goods,” they would be very difficult to get without significant 
concessions, especially in the form of new credits. 22 The Russia Committee, in 
fact, was so convinced of Germany’s desperate need to assure access to Soviet 
resources that they proposed offering the USSR the ludicrously large and 
politically suicidal sum of one billion RM in new credits! 23 

These already questionable hopes for increased trade were further undermined 
by the shifting sands of Soviet internal policy. Starting with the Kirov murder in 
1934, Stalin’s purges had spread to the military by the beginning of 1937. What 
role Stalin’s views of Germany or the machinations of Heydrich and the 
Sicherheitsdienst played in this bloodbath is still unclear. However, the effect that 
decapitating the Red Army had on Soviet international prestige was obvious. 
Hitler, in particular, saw these actions as confirmation that the USSR was a weak 
power that could be dealt with at his leisure. 24 

The purges in the military and throughout Soviet society had important 
ramifications for German-Soviet economic relations as well. In the long term, they 
may have made a closer relationship more likely. Soviet economic production 
slumped as the purges intensified, 25 increasing Soviet desires for industrial imports 
to supplement their own domestic supplies. Furthermore, Stalin’s need for time 
and goods to rearm and rebuild the Soviet military machine made him more 
amenable to an economic arrangement with Germany and certainly became “a 
major factor in his . . . opting for the Nazi-Soviet Pact.” 26 

But in the short term, the purges disrupted the already confused and 
cumbersome Soviet administrative structure, leaving the reins of power in the 
hands of “the politically safe but intellectually retarded.” 27 This made a new 
economic settlement almost impossible. As Ritter had expected, the initial 
soundings during 1937 followed the old pattern of the Soviets trying to discuss 
toning down the press war and other political questions via economic 
representatives such as Schacht, while the Germans tried to focus on expanding 
trade links without having to send military equipment as part of the economic 
package. 28 

These continuing problems worsened during the summer of 1937 and into 
1938 as various key Soviet economic players were recalled and replaced: Soviet 
Trade Commissar Rosengolz by Mikoyan, Soviet Ambassador to Germany Suritz 



28 Feeding the German Eagle 


with Yurenev, Head of the Soviet Trade Delegation Kandelaki with Smolensky, 
Voznesensky as the new head of Gosplan, and so forth. Although not as drastic, 
some changes in personnel occurred on the German side also. For example, 
Schacht, who had become increasingly critical of Hitler’s policies, was replaced 
in July 1937 29 by Walther Funk, “a servile party hack . . . [and] ‘a greasy, shifty- 
eyed, paunchy little man’ whose face reminded him [the American journalist 
William Shirer] of a frog.” 30 Many of the German business representatives in the 
USSR were also recalled because of the danger that the purges in the Soviet Union 
might spill over to German nationals. 31 

This dearth of competent or seasoned trade representatives, especially on the 
Soviet side, sabotaged German plans to renew the basic economic arrangements 
and destroyed the already waning hopes for expanded trade ties. Hilger explains 
that “on the German side nothing stood in the way of another renewal. But the last 
months of 1937 went by without the Soviet government designating a negotiator 
empowered to sign the agreement.” With no new clearing or credit treaties, 32 “our 
trade relations came to a general halt in the first months of 1938.” 33 

New negotiations finally got under way on January 5, 1938. 34 However, the 
usual ensuing rounds of difficult negotiations were made even worse this time by 
purge-inspired fears and delays. As Schnurre argued in his January 10 
memorandum, “it is a disadvantage that the present Chief of the Trade Mission, 
Smolensky, hardly dares to express his own opinion and depends upon his 
Moscow superiors in everything. In Moscow itself the personnel relations in the 
Commissariat for Foreign Trade are completely unsettled.” 35 Nevertheless, the 
previous year’s clearing agreement was renewed on March 1, 1938, but again 
without any of the major changes that the Germans had wanted. 

FOURTH FAILURE: SCHULENBURG’S PLAN, DECEMBER 19,1938 

While the economic treaty structure remained relatively the same and 
German-Soviet trade continued to decline (from 182 million RM in bilateral trade 
in 1937 to 87 million RM in 1938), 36 the German need for Soviet raw materials 
became ever more acute. As Schacht and other German economists had repeatedly 
warned, German “armaments production had reached the limit of peacetime 
expansion possibilities.” 37 Combined with Hitler’s concerns about illness and age, 
his belief that the West was too decadent to hinder his moves, and his race against 
the newly begun crash armaments programs of the other powers. Hitler decided 
to take a series of foreign policy gambles in 1938. 38 

As with the Four-Year Plan, the soon-to-follow Austrian A nschluss in March 
and the increasing pressure on Czechoslovakia were in some measure attempts to 
pull Germany out of the economic mire into which Hitler’s poorly executed 
armaments program had drawn the Third Reich. 39 In his secret February 8 lecture 
to high-ranking military and industrial officials, Hermann Goring maintained that 
“the situation was coming perilously close to disaster,... [and that] the only way 
out of the difficulties . . . was the immediate annexation of Austria and the 



Failed Economic Partnership 29 


conquering of Czechoslovakia” 40 in order to capture their hard currency and gold 
reserves and to harness their resources and factories. Similar concerns among 
many leading German businessmen made them “more or less unhesitatingly ready 
to go along with the Nazi regime’s general, aggressive course of action.” 41 

A second major option for dealing with Germany’s raw material and currency 
crises remained, however, a closer trade relationship with the one major power 
that could supply most of the needed goods without demanding hard 
currency—Russia. Despite the previous failures, therefore, Russia Committee 
President Dr. Reyss made an appeal to German businesses on May 18 “to become 
even more strongly interested in exports to Russia” in order to elicit Soviet raw 
materials in return. 42 

Such appeals, however, were falling on increasingly deaf ears, as German 
business declined to spend the time and effort on the risky, purge-racked Soviet 
market when the German armaments program was offering them plenty of 
lucrative and safe opportunities. Despite the unsubstantiated but frequent rumors 
of a new arrangement that were floating around Moscow at this time, 43 Hitler still 
hesitated to deal with the USSR. Furthermore, the ever-changing cast of Soviet 
negotiators—Merekalov replaced Yurenov as Soviet Ambassador to Germany and 
Skossyrev and then Astakhov replaced Smolensky as Head of the Soviet Trade 
Delegation—remained unwilling to make any concessions to German economic 
wishes without direct approval from the top. 44 Even a tentative economic 
reconciliation, therefore, became nearly impossible during the politically tense 
summer of 1938. 

Nevertheless, there were changes underway that were laying the groundwork 
for a possible economic and maybe even political rapprochement. First, by the 
summer of 1938, Hitler’s main opponent was becoming more and more England 
instead of the USSR. On May 24, for instance, Hitler pushed for a major 
expansion of the German naval program, always a key indicator of his intentions 
toward Great Britain, by arguing that we “must reckon England permanently 
among [our] enemies.” 45 Hitler could afford to change his target because the USSR 
appeared much less of a danger to German plans in the wake of the purges. In fact, 
“Schulenburg’s reports during the first nine months of 1938 could only reassure 
Hitler that he need have no immediate fears of Russia as long as he made no direct 
assault upon her.” 46 With England seen as more of a threat and the USSR as less 
of a problem, some of Hitler’s opposition to reaching an understanding with the 
Soviet Union began to erode. 

A second factor in making an economic arrangement more likely was the 
fallout of the Munich crisis of September 1938. Although there are numerous 
competing interpretations concerning the Soviet reaction to the dismantling of 
Czechoslovakia, one major school of thought has argued that Soviet statements of 
support for the Czechs, if not in militaiy terms, then at least in diplomatic terms, 
were on the whole legitimate. 47 Consequently, “Munich, to the Soviets, was a flat 
rejection of their plea for Western assistance in stemming the Nazi tide. . . . Thus 
it was that Munich gave birth to the Nazi-Soviet agreement.” 48 Or, as Vice- 



30 Feeding the German Eagle 


Commissar for Foreign Affairs Potemkin bemoaned to French Ambassador 
Coulondre upon receipt of the French decision regarding the Munich Accords, 
“My poor fellow, what have you done? For us, I see no other consequence but a 
fourth partition of Poland.” 49 

A second major group of historians has seen these Soviet statements as mostly 
show, and “if the Soviet Government never intended to support France and 
Czechoslovakia in 1938, then distrust of the West instilled at this time can hardly 
have led to Stalin’s pact with Hitler a year later.” 50 Despite the widespread 
acceptance of the first position in general surveys, most of the academic literature 
has downplayed the importance of Munich for Soviet foreign policy. 

In fact, Munich seems to have had more of an influence in changing German 
strategy than in changing the Soviet Union’s traditional policy of security through 
independent strength. Hitler seems to have become more convinced not only that 
he could risk war with impunity but that “the enemy was Britain, not the Soviet 
Union.” 51 Of course, to avoid a two-front war, Poland would have to be dealt with, 
but Hitler and Ribbentrop hoped to seduce the Poles into an alliance with the lure 
of future territorial gains in the Ukraine. When Polish Foreign Minister Beck later 
rejected that idea, Hitler started considering an invasion of Poland to protect his 
eastern front. 52 According to this scenario, Soviet neutrality and economic support 
were both more feasible and more important in German eyes now that a full-scale 
war with the West was becoming a greater possibility. 

Furthermore, despite the bloodless successes in Austria and Czechoslovakia, 
Germany’s economic situation continued to deteriorate, and expanded trade with 
the USSR appeared increasingly vital for Germany. 53 As a result of Germany’s 
growing needs and the hope that Soviet desires to rebuild their military would 
mean an increased demand for German weapons and machines, the Germans 
returned in October once again to the idea of expanding economic ties between the 
two powers. This time the initiative came primarily from German Ambassador to 
the USSR Friedrich von Schulenburg, the old-world gentleman whom Carl 
Schorske describes as having been a “patient, impersonal, and disengaged 
spectator of the passing show.” 54 As explained by Moscow Counselor of Embassy 
Tippelskirch in his October 3 memorandum, Schulenburg now believed that “the 
present circumstances offer favorable opportunities for a new and wider German 
economic agreement with the Soviet Union.” 55 

During these first weeks of October, the Germans made a series of moves that 
the Soviets were quick to follow up. Schulenburg and Soviet Foreign Commissar 
Litvinov agreed to reduce the usual rhetorical bombardments, and Schnurre’s 
negotiations with the Head of the Soviet Trade Delegation, Skossyrev, concerning 
a German offer of a 200 million RM credit intensified. 56 Furthermore, Soviet 
inquiries for German goods picked up, much to the pleasure of Funk and 
Ribbentrop. 57 These various trends coalesced with Schulenburg’s October 26 
proposals to clear away the major problems facing German-Soviet relations and 
offer a new 300 million RM credit to the Soviet Union. 58 

As everyone recognized, “there [were] obvious economic reasons for bringing 



Failed Economic Partnership 31 


[these two powers] together.” 59 The question was whether the political situation 
would permit such economic collaboration. The British thought that “Soviet 
Russia . . . can scarcely become the ally of Germany so long as Hitler lives.” 60 
German diplomats and businessmen hoped otherwise since, according to 
Schnurre’s November 4 memorandum, “Germany’s raw materials situation... is 
such that the emphatic demand has been raised by Field Marshall Goring’s office 
and other interested agencies at least to try to reactivate our Russian trade, 
especially insofar as imports of Russian raw materials are concerned.” 61 

The truth, however, remained, as it had since April 1935, somewhere in 
between these two assessments. Hitler needed Soviet raw materials but would not 
permit large shipments of increasingly short supplies of weapons and machines to 
his ideological enemy and would not countenance the closer political relations that 
such trade would imply. The Soviets needed at least the possibility of a German 
alliance to make the West take more notice of Soviet interests and wanted German 
machines and weapons to rebuild the Soviet military and war economy as part of 
the next Five-Year Plan. 62 On the other hand, Stalin was not willing to sell his 
increasingly strong economic bargaining position for the minimal price that Hitler 
was then willing to offer. 

Consequently, Schulenburg’s proposals made little immediate headway in the 
ensuing two months; and, for the time being, the Germans had to settle for a 
simple renewal of the clearing agreements. Even this limited goal seemed tenuous 
at times. By December 1, Schnurre was already complaining that the main Soviet 
economic negotiator, Davydov, had yet to depart Moscow and that further delays 
would jeopardize timely reissuance of the previous treaties. 63 On December 13, 
Davydov was still in the Soviet capital, though planning to travel to Berlin soon. 64 
Despite these initial delays, the renewal was finally approved on December 19, 
1938, in an almost routine manner. This end result was really very limited, but 
“the German and Soviet presses played it up, and it created quite a stir in the West 
because it had generally been taken for granted that the two countries had 
separated so far as to preclude agreements of any sort.” 65 


FIFTH FAILURE: SCHNURRE’S ABORTED VISIT, JANUARY 28,1939 

Although Schulenburg’s hopes for a quick expansion of German-Soviet trade 
via a new credit deal had proved premature, the German side continued to hope 
that such an arrangement could be worked out in the near future. The man who 
was increasingly becoming the center of such efforts was forty-year-old Karl 
Schnurre. Since Schnurre came to play the pivotal role in the ensuing German- 
Soviet trade relationship and since his reports and memoirs are the key pieces of 
evidence for any study of the economic collaboration, it is worthwhile to take a 
quick look at exactly who this man was and what he wanted to accomplish. 

A veteran of four years of fighting in World War I and a diligent student, 
Schnurre had become a rising star in the German Foreign Office in the 1920s and 
1930s, serving in London, Tehran, and Budapest. In 1936 he had become Head of 



32 Feeding the German Eagle 


the Eastern European Economic Section where he was responsible, among other 
things, for economic relations with the Soviet Union. 66 According to his colleague 
and long-time Russia expert Gustav Hilger, “He was extremely capable and 
efficient, and very ambitious. Moreover, he had great zeal, perseverance, and a 
real understanding for economic problems and the whole complex economic 
system.” 67 

He, along with other Foreign Office and Russia Committee officials such as 
Hilger, Kostring, Ritter, Schulenburg, Wiehl, Tschunke, and Ter-Nedden, was 
also a great believer in closer relations with the USSR. The fact that such 
collaboration would also advance his career probably made this ambitious man an 
even more avid proponent of the Soviet tie. Consequently, when reporting to their 
superiors, Schnurre and his compatriots frequently presented the Soviet Union in 
the best light possible (and correspondingly criticized the German approach) in 
order to convince an otherwise skeptical Hitler or Ribbentrop, for example, to 
strengthen German-Soviet contacts. 

Herein, of course, lies a danger for the historian. Because document 
collections have limited space and have therefore concentrated on these reports to 
or meetings with superiors, a false picture of the economic relationship has 
sometimes emerged: a completely intransigent, deceptive Germany and a 
compromising, even appeasing Soviet Union. The distortion in Schnurre’s and his 
cohorts’ reports became greater the closer they got to Barbarossa. They presented 
increasingly rosy scenarios of potential German-Soviet collaboration in order to 
convince Hitler not to attack the USSR. 68 After the war, of course, Schnurre and 
others emphasized these same reports to prove their innocence of promoting 
aggressive action in the East. 

What Schnurre reported to or heard from his peers, however, often sheds a 
much different light on the subject of German-Soviet economic relations. Here 
Germany is usually the suitor in constant need of Soviet raw materials and willing 
to make burdensome political and economic concessions. The Soviet Union 
becomes the intransigent, tough negotiating partner, ready to use its superior 
bargaining position to get the best deal possible. Although both sides played the 
negotiating game to the best of their ability, the Soviets clearly had the upper hand 
throughout almost the entire relationship. They were neither the blackmailers one 
finds in the works of Phillip Fabry 69 nor the appeasers one finds in 
Schwendemann. They were instead just very tough bargainers looking to expand 
Soviet power at the margins. 

By December 1, 1938, Schnurre had laid out the basic plan that would later 
be accepted, with slight modification, on August 19, 1939: a 200 million RM 
credit over six years at 5 percent interest with a Reich guarantee of 100 percent in 
return for 100 million RM of raw material imports from the Soviet Union during 
each of the next two years in addition to the normal 50 million RM in “current 
business.” The Germans would, therefore, receive 150 million RM worth of mostly 
raw materials from the USSR in 1939 and 1940 in return for which the Soviet 



Failed Economic Partnership 33 


Union would be able to place 500 million RM in mostly industrial orders over the 
next two to three years. 70 

These credit terms were even better for the Soviets than those of 1935, but a 
skeptical Schnurre nonetheless concluded, “The prospects of success for the 
German proposal must not be overestimated.” 71 As before, the political situation 
was still tense, and Hitler and the military were reluctant to make room in their 
armaments program for Soviet shipments. On the other hand, the Soviets did not 
want to play their winning hand too quickly, especially with Soviet internal 
demand claiming more and more of the various resources that the Germans 
coveted. But the terms were generous, and the Soviets wanted at the very least to 
use these negotiations as a counterweight to lure the West; so when Schnurre 
raised the credit idea on December 22, the Soviets agreed to consider the matter. 72 

As Schnurre expected, however, problems had begun to appear even before 
the December 22 sounding. In a December 6 meeting of German officials, in 
which Schnurre and fellow-diplomat Ter-Nedden pushed for a 100 percent Reich 
guarantee of the Russian credit, the Reich Finance Ministry representatives 
rejected the idea and offered 75 percent as the maximum possible given current 
obligations. 73 Schnurre argued that the credit deal would fail without the full 100 
percent guarantee, but finance officials remained adamant. 74 

While the Germans waited for the Soviet reply and haggled over funding, 
rumors again began floating around Moscow of a new Nazi-Soviet arrangement. 
Some of these rumors were probably started by the Soviets to test German resolve 
and were fueled by enthusiastic Soviet press reports about the successful signing 
of the December 19, 1938, clearing agreement. 75 The Germans also seemed 
optimistic about the chances of success. American Charge Alexander Kirk, who 
was well informed about these discussions by the German Second Secretary in the 
Moscow Embassy, “Johnnie” von Herwarth, reported on January 6, for example, 
“that as a result of negotiations which have been proceeding in Berlin, a 
commercial arrangement will shortly be concluded between the German and 
Soviet Governments for the expansion of German-Soviet trade.” 76 

Unfortunately for the Germans, the USSR’s January 11 response threatened 
to undermine these optimistic timetables. Although the Soviets gladly accepted the 
German offer to discuss a new economic arrangement, they demanded that 
Moscow be the site of these talks. Furthermore, they failed to mention what for the 
Germans had been the main item, a Soviet guarantee to send additional raw 
materials over the next two years. Unsure that they would get the goods that they 
wanted and wary of the political spectacle that would result from moving the 
negotiations to the Russian capital, the Germans claimed that it would be 
impossible to send a whole delegation, and Schnurre in particular, to Moscow 
because of the current heavy demand on the time of the various German economic 
negotiators. The Soviets, however, refused to budge, and the Germans were left 
with little choice. 77 As Wiehl explained in a January 12 memorandum, “because 
of the raw materials, our interest in the achievement of a favorable credit 
agreement is so great that it does not appear expedient to frustrate the negotiations 



34 Feeding the German Eagle 


in any way, or even to delay them or render them essentially more difficult by a 
refusal of the Russian request. I would therefore propose to send to Moscow, not 
of course the whole German delegation, but the chairman, Counselor of Legation 
Schnurre.” 78 

As before, the Soviets expected that closer economic relations would entail 
closer political relations as well—not a full-fledged alliance of course, but a 
significant change in previous German policy nonetheless. The fact that Hitler had 
a long and very public chat with the Soviet Ambassador to Berlin at a New Year’s 
reception on January 12 probably convinced the Soviets that the Germans had 
finally decided to pay the Soviet asking price of a truce in the press war and closer 
political relations in return for expanded bilateral trade. 79 On January 20, the 
Germans informed the Soviets of their plan to send Schnurre on January 30 for ten 
days of talks at the end of which an agreement would be signed. Soviet 
Ambassador Merekalov, a servile apparatchik who acted only under Stalin’s 
orders, readily agreed. 80 

If Stalin thought the Germans were now strongly committed to paying his 
high price for more raw materials, his belief proved unfounded. While Goring and 
many others in the German government deemed this approach necessary. Hitler 
and Ribbentrop were still unsure. In fact, Reich Foreign Minister Ribbentrop, the 
vain and arrogant ex-champagne salesman whom Hilger described as “a man who 
occupied a responsible position for which he had neither talent, knowledge, nor 
experience,” 81 had developed his own diplomatic strategy, one in sharp contrast, 
as always, to Goring’s. 82 Ribbentrop hoped that he could lure the Poles closer into 
the German orbit and join with the Japanese and Italians in a united front against 
France and England. Consequently, Ribbentrop had reluctantly agreed to the 
Schnurre trip only as long as the political ramifications could be kept to a 
minimum, hence Schnurre’s roundabout path via Warsaw in the company of 
Schulenburg. 83 

The Poles had no intention of either becoming Ribbentrop’s lackey or 
promoting German-Soviet friendship and apparently leaked the story of 
Schnurre’s planned trip. 84 Exaggerated reports of a thirty-member German 
delegation headed for Moscow began to appear in various newspapers, starting in 
the Krackauer Kurier on January 25. 8S Schnurre’s cover blown and his Polish 
plans ruined, a furious Ribbentrop cancelled the trip to Moscow on January 28 
with the excuse that Schnurre had urgent business in Berlin. 86 


SIXTH FAILURE: SCHULENBURG IN MOSCOW, MARCH 11,1939 

Although Schnurre ’ s mission had been scuttled by the still-intense diplomatic 
winds, this latest plan had progressed further than its recent predecessors. 
Moreover, the German need for Soviet raw materials or goods that could be 
transported via the USSR in case of war with England continued to grow as the 
overall German export situation worsened. 87 Despite the efforts of the Four-Year 
Plan, Germany was still dependent on foreign supplies for 10 to 20 percent of her 



Failed Economic Partnership 35 


foodstuffs, two thirds of her oil, and 80 percent of her rubber. 88 The Germans did 
have hopes that the introduction of the Soviet Five-Year Plan would reverse the 
previous pattern of declining Soviet exports and would increase Soviet interest in 
German industrial goods. 89 

But the already limited odds for success had become even slimmer after the 
Schnurre debacle. The Soviets were justifiably upset and very suspicious of 
German actions. In fact, by February 6, Emil Wiehl, Head of the Commercial 
Policy Section in the German Foreign Office, was warning his superiors that a 
complete economic rupture with the USSR was possible and that this would have 
dire consequences for the German economy. 90 

Both sides did agree on further economic talks in Moscow, but the Germans 
would not commit themselves to giving full negotiating power to Schulenburg or 
to promising a future visit by Schnurre. 91 Consequently, despite the successful 
conclusion of Soviet-Italian economic negotiations on February 7, the German- 
Soviet talks that took place over the next five weeks in Moscow ultimately made 
little progress. 92 

Schulenburg’s main negotiating opponent and the man who would continue 
to represent the USSR throughout the following discussions was the gifted, 
powerful, and engaging Trade Commissar, Anastas Mikoyan. Despite his frequent 
role as “bad cop” to Stalin’s “good cop,” he was nonetheless well liked by his 
German negotiating partners. 93 He was also a survivor, as illustrated by a favorite 
joke among his fellow party members. According to authors Read and Fisher, the 
story has Mikoyan “caught at a friend’s house when it starts raining heavily 
outside. Ignoring it, and without coat or umbrella, he prepares to leave. ‘But you 
can’t walk,’ his friends tell him. ‘It’s pouring down!’ ‘Don’t worry,’ he replies 
cheerfully, ‘I can dodge between the raindrops.’” 94 

Schulenburg and Mikoyan had their first meeting on February 10, at which 
point Mikoyan stated that the USSR could not offer more than 50 million RM of 
additional raw material shipments per year. Schulenburg replied “that for such a 
small return our credit offer would lose much of its interest for us.” 95 By the next 
day Mikoyan had upped the Soviet offer to 70 million RM for the first year and 75 
million RM for the second year. 96 

Despite the continuing swirl of rumors in Moscow about imminent German- 
Soviet economic and political agreements, the Americans, who were kept fairly 
well informed by “Johnnie” von Herwarth, had figured correctly on February 15 
that such a close arrangement was unlikely. 97 The British, who were not privy to 
Herwarth’s intelligence information, thought the chances of a close partnership 
greater, but also concluded on February 20 that the Soviets had only manganese 
and oil “available for export in dangerous quantities.” 98 

In fact, the Moscow talks were making surprising progress. By February 20, 
the Americans had changed their minds and now believed that “within the last few 
days a virtual agreement with a few unimportant exceptions has been reached.” 99 
This was, however, still somewhat premature, and a substantial gap remained 
between the two sides. On February 27 the Soviets had offered to send 160 million 



36 Feeding the German Eagle 


RM in raw materials over the next two years, instead of the 200 million RM the 
Germans had asked for, unless the Germans raised their credit offer from 200 
million RM over one and a half years to 300 million RM over two years. Either 
way, the Soviets demanded seven-year loans at 4.5 percent interest with a 100 
percent Reich guarantee instead of the six years at 5 percent interest with a 75 
percent guarantee offered by Germany. 100 

By March 1 the sides had come closer to agreement with Mikoyan’s offer to 
consider the full German request for 200 million RM in raw material deliveries. 
As a result, Schulenburg’s previously pessimistic reports became somewhat more 
upbeat. On the other hand, in response to Japanese Ambassador to the USSR 
Togo’s request to support Japan in its fishing-rights discussions, Schulenburg 
“repeatedly emphasized that it was not really necessary to slow up the negotiations 
with the Soviet Union—Moscow would take care of that on its own!” 101 

It was, however, not delays from Moscow, but once again decisions in Berlin 
that ended this latest attempt to patch up the German-Soviet economic 
relationship. Hitler still showed himself unwilling to force a reluctant military and 
industry to divert armaments production to Soviet export as long as the West 
seemed ready to appease him with more easy victories like those in Austria and 
Czechoslovakia. Until this strategy had reached a dead end, Hitler apparently 
would rather use the USSR as a bogeyman to scare the West than pay the high 
Soviet economic and political price for their raw materials. Wiehl, therefore, told 
Schulenburg on March 8 to put the negotiations on hold indefinitely, 102 and on 
March 11 ordered him to bring them “to a standstill in a suitable way... [and to] 
continue [them] in a dilatory fashion.” 103 


NOTES 

1. Gerhard Weinberg, The Foreign Policy of Hitler's Germany, 1933-1936, 
(Chicago: University of Chicago, 1970), 221. 

2. See Hjalmar Schacht’s July 15 memorandum in DGFP, C, 4: 453, doc. 211. 

3. Weinberg, Foreign Policy, 1933-1936, 221. 

4. DGFP, C, 4: 783, doc. 386. 

5. Weinberg , Foreign Policy, 1933-1936,222. For the course of the November 
and December negotiations, see Dittmann’s memorandum in DGFP, C, 4: 967-72, doc. 
483. 

6. See DGFP, C, 4: 1009-10, doc. 502; and 1033, doc. 518. 

7. For details of this treaty, see DGFP, C, 5: 488-94, doc. 302. 

8. Hans-Erich Volkmann, “Auflenhandel und Aufriistung in Deutschland 1933 bis 
1939,” in Wirtschaft und Riistung am Vorabend des Zweiten Weltkrieges, eds. Friedrich 
Forstmeier and Hans-Erich Volkmann (Diisseldorf: Droste, 1975), 104. 

9. Robert Gibbons, Soviet Industry and the German War Effort, 1939-1945( Ph.D. 
diss., Yale, 1972), 21. 

10. Adam B. Ulam, Expansion and Coexistence, 1917-1973, 2nd ed. (New York: 
Praeger, 1974), 234. 

11. DGFP, C, 5: 571, doc. 341. 

12. DGFP, C, 5: 572, doc. 341. 



Failed Economic Partnership 37 


13. Carroll, 128-29. 

14. Carroll, 139, and Hans-Jurgen Perrey, Der Rufilandausschuft der deutschen 
Wirtschaft. Die deutsch-sowjetischen Wirtschaftsbeziehungen der Zwischenkriegzeit. Ein 
Beitrag zur Geschichte des Ost-West-Handels (Munchen: R. Oldenburg, 1985), 276. 

15. DGFP, C, 5: 965-66, doc. 535. 

16. DGFT\ C, 5: 965-66, doc. 535. 

17. DGFP, C, 5: 1068-70, doc. 591. 

18. DGFP, C, 5: 1115, doc. 615. 

19. See in particular the interesting, but sometimes questionable, account by Walter 
Rrivitsky, I Was Stalin's Agent (London: Hamish Hamilton, 1939), 37-38. Here he argues 
that Stalin had ordered Kandelaki “to go outside the ordinary diplomatic channels and at 
whatever cost arrive at a deal with Hitler.” 

20. BA/APA, “Sowjetunion, Wirtschaftliche Angelegenheiten: RufllandausschuB der 
deutschen Wirtschaft 1935-36,” NS 43/39 , 319. 

21. DGFP, C, 6: 252-53, doc. 129. 

22. BA/RFM/RA, “Rundschreiben (18.3.37),” R 2/17281, 1. 

23. Perrey, 285. 

24. For a short overview of the origins and effects of the Soviet military purges, see 
Bullock, Hitler and Stalin, 490-95. 

25. Alec Nove, An Economic History of the USSR (New York: Penguin, 1969), 227. 

26. Bullock, Hitler and Stalin, 555. 

27. This is Paul Kennedy’s characterization of the new Soviet military leadership 
as quoted in Bullock, Hitler and Stalin, 555. 

28. See, for example, Schacht’s February 6,1937, report in DGFP, C, 6: 379-80, 
doc. 183; Neurath’s April 17 memorandum in DGFP, C, 6:665, doc. 323; and Karl Ritter’s 
April 30 minute in DGFP, C, 6: 693, doc. 339. 

29. Carroll, 146^17. 

30. This is William Shirer’s description as quoted in Read and Fisher, 20. 

31. See State Secretary Mackensen’s August 16 warning to the Moscow Embassy 
in DGFP, C, 6: 1013-14, doc. 517. 

32. The 1935 credit terms ended June 30, 1937, with the Soviets only requesting 
183 million RM of their possible 200 million RM total. See DGFP, D, 1: 912, doc. 619. 

33. Hilger and Meyer, 284. 

34. DGFP, D, 1: 913-14, doc. 619. 

35. DGFP, D, 1: 903, doc. 613. 

36. See Appendix A, Tables 1.1 and 1.2. 

37. Volkmann, Aufienhandel, 100. 

38. Noakes and Pridham, 2: 753-54. 

39. For an example of the debate between Tim Mason and some of his critics, such 
as Richard Overy, about the extent of these internal, economic motivations for Nazi 
aggression in 1938 and 1939, see David Kaiser, Tim Mason, and Richard Overy, “Debate: 
Germany, ‘Domestic Crisis’ and War in 1939,” Past and Present (February 1989): 200-40. 

40. Read and Fisher, 47-48. 

41. V olkmann, Aufienhandel, 112. 

42. BAMA/OKW/WiRuAmt/Wi, “Vortrag von Dr. Reyss in der Vorstandssitzung 
des Russland-Ausschusses der Deutschen Wirtschaft (18.5.38),” Wi/ID.ll, 1. 

43. DGFP, D, 1: 920-21, doc. 626. 



38 Feeding the German Eagle 


44. See DGFP, D, 1: 927-28, doc. 629, for German complaints in June about the 
slow progress of negotiations with the Soviets. 

45. Watt, How War Came , 40-41. 

46. Carl Schorske, “Two German Ambassadors: Dirksen and Schulenburg,” in The 
Diplomats, 1919-1939, eds. Gordon Craig and Felix Gilbert (New York: Atheneum, 1971), 
490. 

47. Bullock, Hitler and Stalin, 584. 

48. See Thomas Bennet, The Soviets and Europe, 1938-1941 (Geneva: Universite 
de Geneve, 1951), 107. 

49. As quoted in Franklin Ford and Carl Schorske, “The Voice in the Wilderness: 
Robert Coulondre,” in The Diplomats, 1919-1939, eds. Gordon Craig and Felix Gilbert 
(New York: Atheneum, 1971), 568. 

50. McSherry, 1: 96. 

51. Donald C. Watt, “Setting the Scene,” in 1939: A Retrospect Forty Years After, 
ed. Roy Douglas (Hamden, CT: Archon, 1983), 19. 

52. Watt, Setting the Scene, 19. 

53. BAMA/OKWAViRuAmt/Stb, “Stand der wirtschaftlichen Lage (Okt. 1938),” 
RW19/93, 88-97; and BAMA, RW19/93, 121-23. 

54. Schorske, 488. 

55. DGFP, D, 4: 603-4, doc. 476. 

56. PA/Schnurre, Leben, 67. 

57. BA/RK, “Auswartige Angelegenheiten, Sowjetunion(17.10.38),” .R 43/1489a, 

1. 

58. DGFP, D, 4: 607, doc. 478. 

59. Documents on British Foreign Policy , 3rd Series, vol. 3 (London: HMSO, 
1947-), 253. 

60. DBFF, 3: 253. 

61. DGFP, D, 4: 608, doc. 479. 

62. See German Military Attache Kostring’s analysis in BAMA/OKH, 
“Schriftwechsel: O Qu IV - Mil.Att. Moskau (18.11.38 ),” RH 2/2932, 71. 

63. PA/HaPol/Wiehl, “Russland (1.12.38),” R 106230, E041378. 

64. PA, R 106230, E041377. 

65. Hilger and Meyer, 284. 

66. For more information on Schnurre’s personal background, see the first eight 
chapters in his unpublished memoirs (PA/Schnurre, Leben, 1-49). 

67. Hilger and Meyer, 285. 

68. See Chapter 13 and Chapter 14 for more details. 

69. See, for example, Phillip W. Fabry, Der Hitler-Stalin-Pakt 1939-1941 
(Darmstadt: Fundus, 1962), 427-29. 

70. DGFP, D, 4: 614, doc. 481. 

71. DGFP, D, 4: 615, doc. 481. 

72. DGFP, D, 4: 615-18, doc. 482. See also PA/HaPol/Clodius, “Russland 
(22.12.38),” R 105998, H000957. 

73. PA, R 106230, 452584. 

74. PA, R 106230, E041379. 

75. PA/BM, “Presse- und Propagandawesen (2.1.39),” Fach 68, 1. 

76. Foreign Relations of the United States, 1939, vol. 1 (Washington D.C.: 
Department of State, 1958-59), 312. 



Failed Economic Partnership 39 


77. DGFP, D, 4: 618-20, doc. 483. 

78. DGFP, D, 4: 620-21, doc. 484. 

79. Watt, How War Came, 122. 

80. DGFP, D, 4: 621-22, doc. 485. 

81. Hilger and Meyer, 293. 

82. For the personal rivalry that caused Ribbentrop and Goring almost inevitably to 
take opposing views on German diplomatic policy, see Watt, How War Came, 618. 

83. Schorske, 498. 

84. For a description of Polish foreign policy in 1939 and how the Poles chose the 
best of their bad options, see Jozef Garlinski, “The Polish View,” in 1939: A Retrospect 
Forty Years After, ed. Roy Douglas (Hamden CT: Archon, 1976), 66. 

85. PA/BdStS, “Russland,” R 29712, 111281, fiche 925. 

86. DGFP, D, 4: 622, doc. 486. 

87. See BAMA, RW19/94, 63 & 68, and David Kaiser’s contribution in Kaiser, 
Mason, and Overy, 205. 

88. Carroll, 177. 

89. Fritz Tschunke, “Rtickblick und Ausblick auf das RuBlandgeschaft,” Ost- 
Europa-Markt, January 1939, 9. 

90. DGFP, D, 4: 624-25, doc. 488. 

91. DGFP, D, 4: 625, doc. 489. 

92. Ost-Europa-Markt, February 1939, 100. 

93. See Hilger and Meyer, 285, n. 11, and PA/Schnurre, Leben, 60. 

94. Read and Fisher, 436. 

95. DGFP, D, 4: 626, doc. 490. 

96. DGFP, D, 4: 626-27, doc. 491. 

97. FRUS, 1939, 1: 315-16. 

98. DBFP, 4:614. 

99. FRUS, 1939, 1: 316. 

100. PA, R 106230, E041389. 

101. DGFP, D, 4: 628-29, doc. 493. 

102. DGFP, D, 4: 630, doc. 494. 

103. DGFP, D, 4: 631, doc. 495. 



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Chapter 3 


Talking About Talking 


By March 11, 1939, the intermittent, long-running German-Soviet economic 
discussions had reached a dead end, a situation many German officials found 
“extremely regrettable in view of Germany’s raw-materials position.”' Regardless 
of these resource needs, Hitler had been and was still unwilling to pay the price 
that Stalin had been asking for since 1935. If a deal was to be worked out, 
therefore, either Stalin would have to lower his demands, or Hitler would have to 
raise his offer, neither of which seemed very likely. Contrary to expectations, a 
series of events in the ensuing five months did make it possible for the two sides 
to begin talking seriously again. 


FIRST SOUNDINGS, APRIL 17 

The first big event, or really nonevent, was Stalin’s famous March 10 speech 
in which he explained, “The tasks of the Party in the sphere of foreign policy are: 
(1) To continue the policy of peace and of strengthening business relations with 
all countries; (2) To be cautious and not allow our country to be drawn into 
conflict by warmongers who are accustomed to have others pull the chestnuts out 
of the fire for them.” 2 While a few writers, such as Angelo Rossi, have seen these 
statements as a clear signal of Stalin’s fervent desire for closer relations with Nazi 
Germany, 3 most historians have argued that Stalin was probably just continuing 
his traditional policy of neutrality or at most casting a line into the troubled 
diplomatic waters to see if either big fish would take his bait. 4 The speech certainly 
was not seen by anyone at the time, except for a few low-ranking German officials, 
as a significant pro-German move. In fact, by May 10, when Schnurre met with 
Germany’s major diplomatic and military leaders to inform them of the situation 



42 Feeding the German Eagle 


in the Soviet Union, none of them had had any inkling of the possible importance 
of Stalin’s pronouncements. 5 

Still nothing happened. But in the second half of March, the Soviet situation 
changed dramatically. Pressed by continuing economic constraints and his desire 
to wash away the bad taste Munich had left him with, 6 Hitler sent the Wehrmacht 
into Prague on March 15 and then Memel on March 23. A stunned Polish Foreign 
Minister Beck turned to the now-infuriated British, who offered on March 31 to 
guarantee Polish territorial integrity against German encroachments. With war in 
Poland suddenly looming on the horizon, the Soviet Union became the vital player 
in the European balance of power. As Adam Ulam argues, “A few words spoken 
by Mr. Chamberlain transformed the U. S. S. R. from being in a hopeless diplomatic 
situation to being the arbiter of Europe’s fate.” 7 

Not only had the political situation been radically transformed, but so too had 
the economic situation. While Hitler probably thought the British support for 
Poland a bluff all the way up until September and Stalin appears to have had real 
doubts about British resolve as well, both men had to take into account the 
possibility that war in Poland and even war in Europe could occur in the near 
future. As a result, both Germany and the Soviet Union intensified their military 
building plans, often to the point of hysteria. Hitler, for example, called for a navy 
the size of Great Britain’s and an air force so large that it would have taken 85 
percent of the world’s annual gasoline production just to fuel it! 8 Stalin, for his 
part, pushed for a fifteen battleship, fifteen heavy cruiser navy to rival that of the 
United States. 9 

In order to build these huge arsenals, both sides required what the other power 
had—raw materials from the USSR in return for technology and machines from 
the Reich. A new series of German reports reinforced the long-standing point that 
Germany could not continue its rearmament drive without access to Soviet 
resources. War Economy and Armaments Office ( WiRiiAmt) officials complained 
on April 1 that the occupation of Bohemia had solved none of the economic 
dilemmas facing the Reich, but had instead merely added to Germany’s raw 
material needs. As a result, the export situation was going from bad to worse. 10 
Similarly, an April 9 report on Germany’s oil situation argued that if a long-term 
war developed against both the West and the USSR, Germany would have to 
secure at least Rumania and probably also the Caucasus to achieve victory, because 
current oil stocks were only sufficient for three to four months of war. 11 

Historians Muller and Schwendemann have used this and similar economic 
warfare reports to show widespread, anti-Soviet aggressive intentions in the 
German military. In fact, all the aggressive measures hinged on the contingency 
that the Soviet Union would be in the enemy camp. Soviet belligerency was merely 
a logical assumption and not a clear indication that the WiRiiAmt desired an 
invasion of the Soviet Union. Alternatively, because the report’s demand that 
Germany have access to Baku’s oil was so obviously improbable, one might also 
see much of this document as a warning that Germany was not ready for a major 
war, especially not one that would involve the USSR as an enemy. 



T alking About T alking 4 3 


In any case, the Soviet Union also needed German economic aid to build up 
its own military-industrial complex. In a March 15 circular from the Russia 
Committee of German Industry, Fritz Tschunke, editor of Die Ostwirtschaft, 
sharpened his traditional argument in favor of expanded Russo-German trade. He 
argued that the Soviet Union’s upcoming Third Five-Year Plan would require 
massive new infusions of technology and industrial equipment. Germany could, 
he explained, take advantage of this new potential market to acquire more raw 
materials. 12 Combined with increasing demand for the rearmament program, the 
Soviets too supposedly had new-found economic incentive to reach a deal with 
Germany. 

Nevertheless, Stalin still held the upper hand in any potential economic 
negotiations. If war came, Germany had nowhere else to turn for certain raw 
materials such as manganese. The Soviet Union, on the other hand, still had 
possible connections to England or the United States to acquire manufactured 
goods, as demonstrated by the trading patterns of the previous two decades 13 and 
also somewhat by lend-lease after 1941. As if to prove this point, the Soviets 
slowed their exports to Germany to a trickle. In a March 29 meeting, for instance, 
officials of the Four-Year Plan complained that the Soviets had cut back their 
shipments to the bare minimum required by earlier treaties. But the Germans felt 
they could do little to change the situation given Hitler’s current policy. 14 

This policy, however, was beginning to change, if ever so slightly. The 
Germans, and Hermann Goring in particular, carried out some tentative soundings 
in early April, 15 which culminated in the April 17 meeting of Soviet Ambassador 
Merekalov and State Secretary Weizsacker. Here Merekalov brought up the 
unresolved question of Soviet contracts with the Skoda arms factoiy in the former 
Czechoslovakia, the broken-down commercial negotiations, and even the 
possibility of closer political relations, explaining that “there exists for Russia no 
reason why she should not live with us on a normal footing. And from normal, the 
relations might become better and better.” 16 

At the same time that the Soviets were drawing the Germans into new 
conversations, Stalin was also offering the West the possibility of a Triple 
Alliance, backed by a military convention. In effect, the Soviets had again cast 
their line into the sea as they had done on March 10. Only this time, the Soviets 
had more attractive lures and were trawling for bigger catch. 17 

The Soviets also had at least one major advantage over the “fish” they were 
casting for—spies. Through the likes of John Herbert King in London and Richard 
Sorge in Tokyo, the Soviets were able to feed stolen information to the Germans 
and then find out their reactions. As Donald Watt explains, “whoever conducted 
the Soviet side of the negotiations with Britain and Germany was able to play on 
their partners like a poker player with marked cards.” 18 

MOLOTOV’S MAYBE, MAY 20 

Despite Stalin’s seemingly superior position as fisherman to the German and 
British fish, there were still precious few tugs on the line. The Soviets were 



44 Feeding the German Eagle 


probably dangling bait just too big for the British to bite on, the West having 
already committed itself to the Poles. The English leaders delayed in answering 
the extensive April 17 proposal, finally responding with their own plans on May 
8 and May 27. The Soviets rejected both proposals. The Germans had, in theory, 
much more to offer Russia, and Stalin therefore apparently still preferred an 
agreement with Hitler unless the West was willing to accede to his more extensive 
demands. 19 

Unfortunately for the Soviets, Hitler was still unwilling to accept the possible 
Soviet price, and Ribbentrop had other ideas about how to resolve the looming 
Polish crisis—a closer alliance with Italy and Japan. Consequently, the Germans 
spent the rest of April ignoring the Soviet bait, having apparently decided that 
they were unwilling to swallow the whole lure in order to get the food they wanted. 

By early May, however, the Germans had changed their minds and were now 
beginning to circle the Soviet lines. First of all, Ribbentrop’s deal with the 
Japanese was going up in smoke as the fires of the Russo-Japanese conflict in the 
Far East began to flare. On the one hand, Germany began eyeing Moscow to make 
up for the loss of Tokyo. On the other hand, this Far Eastern struggle put pressure 
on the USSR to insure its security in the West, and only Germany could really 
offer that security. 20 Not surprisingly, therefore, the day after Japan rejected 
Ribbentrop’s proposal for a military alliance, Hitler gave a speech that was notable 
for its omission of the usual diatribe against the Soviet Union. 21 

In addition to the problems with Japan, Germany continued to struggle with 
its lack of raw materials, making an economic arrangement with the Soviet Union 
ever more enticing. An April 20 article in Der Vierjahresplan, for example, 
complained of dwindling rubber stocks, as motorization of the economy and of the 
military continued, and warned that there was little Germany could do about the 
situation because rubber was “practically a British-Dutch monopoly.” 22 A May 
report from the Office of War Economy Planning warned that if Russia were 
hostile in an upcoming war, Germany would need to find substitutes for about 
165,000 tons of manganese and almost 2 million tons of oil a year. Germany 
might also be cut off from Sweden’s vital iron ore supplies. 23 Finally, on May 8, 
the WiRiiAmt estimated Germany’s oil stocks in case of war at a mere 3.1 
months. 24 

Even though these economic and diplomatic problems were gradually 
pressuring Germany toward renewed talks with the Soviets, Hitler still refused to 
bite. Fed up with waiting, Stalin brought in a new fisherman on May 3, hoping 
that Vyacheslav Molotov, the man whose demeanor Donald Watt has described as 
that of “a salesman of encyclopedias down on his luck,” 25 could reel in the catch 
that had eluded Litvinov. Although Molotov’s appointment was probably not 
meant as the strong pro-German move that Churchill and others believed, 26 it was 
Berlin that finally started to pull on the line. Within a couple days. Hitler had 
ended German press attacks on the USSR and recalled for consultations 
Schulenburg and Ernst Kostring, the German military attache in Moscow. 

At the same time, flickers of life began to appear in the economic 



T alking About T alking 4 5 


negotiations, the most important remaining link through which the two sides could 
still communicate directly. On May 5, Schnurre invited his occasional card¬ 
playing companion Soviet Counselor of Embassy Astakhov, “a tall, thin young 
Don Cossack with a sparse goatee beard,” 27 to a meeting during which Schnurre 
approved the Soviet requests on the unresolved contracts that the USSR had 
previously scheduled with the Skoda Arms Works in Czechoslovakia. According 
to Schnurre, “Counselor of Embassy Astakhov was visibly gratified at this 
declaration and stressed the fact that for the Soviet Government the material side 
of the question was not of as great importance as the question of principle. He 
inquired whether we would not soon resume the negotiations which had been 
broken off in February.” 28 Although Schnurre was unable to answer Astakhov 
affirmatively at that moment, the encounter certainly boded well for the future. 

Hitler had obviously become more interested in the Soviet option. On the 
tenth of May, for instance, he met with Schnurre and Counselor of Embassy 
Hilger, “a walking encyclopedia” of Russian and Soviet history 29 who “even spoke 
German with a slight Russian accent,” 30 to discuss the developing situation. 
According to Schnurre, Hitler sat quietly, listened attentively, and asked pertinent 
questions, 31 all rarities for a meeting with the Fuhrer. Hitler’s meeting less than 
a week later with Kostring was similar in nature, 32 indicating that he was studying 
an agreement with the Soviet Union very seriously during the middle of May. And 
his interest appears to have been reinforced on May 17 when Astakhov called on 
Schnurre again to restate “in detail that there were no conflicts in foreign policy 
between Germany and Soviet Russia, and that therefore there was no reason for 
any enmity between the two countries.” 33 

Interestingly, Roberts notes that Astakhov’s report to Moscow portrayed this 
meeting somewhat differently. Here the Germans are the ones pushing for closer 
relations and the Soviets are the ones making “general noises.” 34 It appears that 
Astakhov as well as Schnurre was attempting to entice his superiors into further 
negotiations by presenting the other side as being very interested in closer 
relations. 

Neither Hitler nor Stalin appeared convinced, however. The general German 
consensus was that the Allies still had the jump on reaching an agreement with the 
Soviet Union. Schnurre’s proposal to restart economic negotiations was accepted, 
therefore, in part simply to forestall a possible Allied-Soviet deal. 35 Moscow also 
seemed hesitant. After the repeated hints from Astakhov and Merekalov, Molotov 
appeared surprisingly reserved on May 20 when he met with Schulenburg. In reply 
to Schnurre’s proposed journey to Moscow to restart the economic negotiations, 
“Herr Molotov replied that the course of our last economic negotiations had given 
the Soviet Government the impression that we had not been in earnest in the 
matter and we had only played at negotiating for political reasons.... The Soviet 
government could only agree to a resumption of the negotiations if the necessary 
‘political bases’ for them had been constructed.” 36 Although Hilger and others saw 
this statement as a repetition of long-standing Soviet demands and an “implicit 
invitation,” “In Berlin the ambassador’s report created the impression that 



46 Feeding the German Eagle 


Molotov had given a veiled rebuff to the German advances.” 37 It was the same old 
story. The Germans had nibbled, but had refused to bite. 

MORE SOUNDINGS, JUNE 17 

Within a week, however, they were circling the Soviet lines once again. First, 
the Pact of Steel was signed on May 22, signaling the end of a possible alliance 
with Japan and raising the importance of the Soviet Union for Germany. Second, 
Hitler’s May 23 meeting to discuss war plans against Poland had shown the 
military’s reluctance even to contemplate a war against both the West and the 
Soviet Union. 

These already growing concerns were heightened by the negotiations leading 
up to the May 27 Western proposals to the Soviets. On May 26 the Nazi leadership 
considered but then apparently rejected sending an order to Schulenburg that had 
argued, “Since the latest reports indicated that the Anglo-Russian pact 
negotiations may shortly lead to a positive result in one form or another, it seems 
appropriate that in further conversations with the Russians we should emerge from 
our reserve more markedly than has been contemplated hitherto.” 38 

Although the German fears proved unfounded and the Soviets quickly rejected 
the Western proposals, the Germans decided it was finally time to get back in the 
game, and on May 30 Weizsacker notified Schulenburg, “Contrary to the policy 
previously planned, we have now decided to undertake definite negotiations with 
the Soviet Union.” 39 The ensuing discussions were channeled through the 
economic negotiations, in part because the economic needs of the two sides were 
so great but also in part because close military and diplomatic connections had 
been severed in the mid-1930s and this was the only means of communication left 
open. But if the past failures from 1935 to 1939 were to be any indication, these 
negotiations were going to be long and very difficult. In fact, much of June was 
spent continuing the elaborate display of signal and countersignal as Hitler 
explored alternative ways to resolve the Polish crisis. 40 

The Soviets certainly seemed interested in a deal, assuming their conditions 
were met. During his May 30 meeting with Weizsacker, Astakhov asserted that 
the barrier to any agreement had been raised by the Germans. Logically, therefore, 
the way was open to a closer relationship if the Germans changed their policy. 41 
Schulenburg also reported that Molotov’s May 31 speech “avoided sallies against 
Germany, and showed readiness to continue the talks begun in Berlin and 
Moscow.” 42 

At the same time that they were offering these hints of availability, however, 
the Soviets were also putting stumbling blocks in the path toward a closer 
economic relationship. During a June 2 meeting with Hilger, Mikoyan argued that 
Moscow “had lost all interest in these [economic] negotiations” as a result of 
earlier German procrastination. 43 And on June 6, American Charge Alexander 
Kirk reported that “Johnnie” von Herwarth “did not anticipate that any important 
results would follow” from the soon-to-be-renewed economic negotiations, because 



Talking About Talking 47 


neither side was willing to give up enough of the resources or machine tools that 
the other power wanted. 44 

The mixed Soviet signals and mixed German response continued over the 
next couple of weeks. Although the Soviets did agree in principle by June 8 that 
Schnurre could come to Moscow to continue economic negotiations, the Russians 
stipulated that the Germans first accept the Soviet February proposals as the basis 
for discussions. 45 These demands set off another series of “pow-wows” as first 
Schulenburg, then Hilger, and then Kostring trekked to Berlin to meet with 
Hitler. 46 More positively, Astakhov paid an unusual visit to the Bulgarian 
Ambassador in Berlin on June 14 to inform him (and apparently the Germans as 
well) that the USSR “was vacillating between three possibilities, namely the 
conclusion of the pact with England and France, a further dilatory treatment of the 
pact negotiations, and a rapprochement with Germany. This last possibility, with 
which ideological considerations would not have to become involved, was closest 
to the desires of the Soviet Union.” 47 

Even before this hint, the Germans appeared ready to commit themselves by 
June 12. They tentatively agreed to most of the Soviet terms for Schnurre’s 
departure 48 and relayed this message via Hilger to Mikoyan on June 17. 49 Such a 
move on the economic front had profound implications for the general state of the 
relationship as Karl Schnurre detailed in a June 15 memorandum. Elaborating on 
the possible goals of his mission, Schnurre outlined the recent history of the 
economic negotiations and explained that the crucial turning point had arrived. 
If he did go to Moscow, Schnurre argued that “we shall still, for economic and 
political reasons, have to reach agreement with the Russians even if a substantial 
increase in the Russian offer of last February should not be obtained.” If the 
Germans did not give into Soviet demands and allowed the economic negotiations 
to break down yet again, any chance for expanded German-Soviet trade and closer 
political relations would be ruined. 50 In short, the moment of decision was at hand, 
and since the Soviets held the better cards, the Germans really had no choice but 
to play Stalin’s game. 

TALKS REOPENED, JULY 21 

Having received for two months, and actually for more than two years, these 
suggestions of Soviet desire for closer relations and having finally, it appeared to 
them, acceded to most of the Soviet demands, the Germans seemed confident they 
could reach an economic agreement in fairly short order. They were soon 
disappointed. 

If Schnurre could see that the Soviets were the ones in control of the agenda, 
so could Stalin, in part because he had access to German diplomatic strategy 
thanks to Rudolf von Scheliha, a Soviet mole operating in the German Embassy 
in Warsaw. 51 The next couple of weeks saw the Soviets play out their lines a bit 
in order to make sure that the Germans really were on the hook and then to tire 
them out before they were reeled in. A quick deal would give the Germans their 



48 Feeding the German Eagle 


resources and split the Soviets from the West. A longer lead-up, on the other hand, 
would allow the USSR to continue the bidding war and ensure that the Germans 
did not reap their political benefits without first providing a commensurate treaty 
guaranteeing Soviet security. 

Signs of Stalin’s tactics of delay were soon forthcoming. Hilger’s June 25 
meeting with Mikoyan went nowhere when the Soviet Trade Commissar suddenly 
rejected Schnurre’s mission as too risky. 52 Schnurre interpreted Mikoyan’s actions 
as follows: “While, on the Soviet side, everything is being done to delay a decision 
on the resumption of negotiations, on the other hand the Soviets are unmistakably 
endeavouring not to break off all ties, and to keep open the possibility of resuming 
negotiations with us at a time tactically more favourable to them.” 53 Undaunted, 
Schulenburg proposed to dispel Mikoyan’s distrust by having the Soviets send 
their own special delegates to Berlin; 54 and, after a relatively successful meeting 
with Molotov on June 28, Schulenburg concluded “that the Soviet Government is 
greatly interested in knowing our political views and in maintaining contact with 
us.” 55 

Some in Berlin were not so confident about the direction these proposed talks 
were taking. While generally approving of Schulenburg’s strategy, Schnurre, for 
example, harshly criticized the proposal to move the talks to Berlin, arguing that 
without Mikoyan, “it would be better to postpone the question of the negotiations 
entirely, since any other way will neither produce the political advantage expected 
by us nor bring us the clarity necessary for a decision on the economic possibilities 
existing vis-a-vis the Soviet Union.” 56 Hitler also appears once again to have 
cooled to the whole idea, and on June 29 he canceled further discussions with the 
Soviets. 57 

This decision to cut off all talks appears not to have been enforced too 
rigorously, however. Although Herwarth and others remained “skeptical... of any 
real results issuing from the trade talks now in progress,” 58 the Germans were soon 
pressing forward again, with Schulenburg and Molotov holding yet another 
friendly meeting in Moscow on July 3. 59 

The Germans could only be encouraged by the continuing difficulties in 
Anglo-Soviet negotiations. By July 1, Molotov had brought up the intractable issue 
of “indirect aggression” that would plague the talks for the next two months. In 
fact, the West seems increasingly to have viewed the negotiations with the Soviets 
as important primarily in keeping the totalitarian powers apart. 60 So by mid-July, 
the roles had been reversed, and it was the Western Powers who now felt 
themselves on the defensive in the bidding war with the Soviets. Nevertheless, it 
was still up to the Soviets to set the final price for their support and up to the 
Germans to decide whether they could afford to pay that price. In the meantime, 
the negotiations with the West had to be continued to inflate the value of Soviet 
friendship and to provide a backup in case talks with the Germans failed to yield 
the desired results. 

For their part, the Germans seemed resolved to meet at least some of the 
Soviet economic demands for German military equipment and better credit terms. 



T alking About T alking 4 9 


On My 7, Weizsacker notified the Moscow Embassy of Berlin’s specific plans for 
economic talks. 61 The German embassy then passed along the message to 
Mikovan on My 10. 62 Despite some disagreements over details and despite the 
continuing request {contra Schulenburg) that Schnurre carry out the negotiations 
in Moscow, the Germans had finally made a real strike for the Soviet bait. 

But they were still not yet securely on the line. On My 12, Werner 
Tippilskirch, a high-ranking minister in the Moscow Embassy who was then back 
in Berlin, noted that Weizsacker had talked merely about slow progress in the 
economic realm. 63 He went on to explain, “According to my impressions the 
problem of the Soviet Union is still of the greatest interest here. The opinions, 
however, fluctuate and are undecided. The formation of a definite political opinion 
has not yet materialized.” 64 In any case, the Germans would go no further without 
a definite response from the Soviet Union. 

Stalin must have realized what was at stake. Ever since 1935, the Germans 
had backed away from a closer economic relationship because it would cut into 
German armaments production and imply a certain level of political toleration. 
Now the Germans were making serious proposals. Although there were still 
potential pitfalls, no other nation could offer the Soviet Union the combination of 
technology and security that Germany could. 

Not surprisingly, therefore, the Soviets responded to the German offer on My 
17 when Evgeny Babarin, the middle height, middle-aged middle-man who served 
as Deputy Head of the Soviet Trade Delegation in Berlin, paid a call on Schnurre 
to offer the USSR’s counterproposals. Although clearly not agreeing with 
everything in the earlier German offer, the Soviets had obviously come out from 
behind their veil of hints and suggestions. 65 

The most important outstanding issue was the location of the negotiations. 
The Germans still wanted the negotiations held in Moscow, because the chances 
of a quick and public success were greater. Germany could get the raw materials 
she wanted and drive a permanent wedge between the Soviets and the Allies 
without having to offer a formal political agreement. Negotiations held in Berlin 
would be lower profile, allowing the bidding war with the Allies to continue, and 
more easily controlled by the Soviets, who could constantly claim the need to refer 
questions back to Moscow, since the Soviet negotiators were always held on a 
tighter rein than the more independent German officials like Schnurre. Stalin 
would then be able to drag out the negotiations until he had gotten both his 
economic and his political “pound of flesh.” 66 

The Germans quickly caved in to the Soviet demand, and official economic 
talks were reopened in Berlin between Babarin and Schnurre on My 21 and 
announced in the papers on My 22. 67 Hitler, via Weizsacker, even promised to the 
Moscow Embassy that “we will here act in a markedly forthcoming manner, since 
a conclusion, and this at the earliest possible date, is desired for general reasons.” 68 
That it would be the Soviets who again got their way on this, the crucial question, 
highlights the fact that the Soviets were still holding a winning hand now that the 



50 Feeding the German Eagle 


two sides were finished “talking about talking” and could move on to resto rin g the 
economic partnership that had crumbled almost five years before. 

NOTES 

1. DGFP, D, 4: 631, doc. 495. 

2. As quoted in Arnold Toynbee, ed.. Documents on International Affairs , vol. 1 
(London: Oxford University, 1951), 370. 

3. Angelo Rossi, The Russo-German Alliance (Boston: Beacon, 1951), 9-10. 

4. Carr, German-Soviet Relations, 127. 

5. PA/Schnurre, Leben, 74. 

6. Watt, How War Came, 142. 

7. Ulam, 267. 

8. Williamson Murray, The Luftwaffe, 1933-1945, 1983 (Washington D.C.: 
Brassey’s, 1996), 11. 

9. Tobias Philbin, The Lure of Neptune. German-Soviet Naval Cooperation and 
Ambitions, 1919-1941 (Columbia: University of South Carolina, 1994), 144. 

10. BAMA/OKW/WiRuArnt/Stb, “Stand der wirtschaftlichen Lage (1.4.39),” RW 
19/94, 103 & 110. 

11. BAMA/OKW/WiRuAmt/Ro, “Die Mineralol Versorgung Deutschlands im 
Kriege,” Wi/1.37, 1-2, 5, & 30. 

12. BA/RFM/RA, “Rundschreiben: Investitionsprogramm des 3. Funijahresplanes 
der UdSSR,” R 2/16467, 1. 

13. See Appendix A, Tables 1.3 and 1.4. 

14. BA/BfVP, “Allgemeine Wirtschafts- und Versorgungsfragen 1939-1942,” R 
26/IV/51, 5-6. 

15. See Donald C. Watt, “The Initiation of Talks Leading to the Nazi-Soviet Pact: 
A Historical Problem,” in Essays in Honour ofE. H. Carr, eds. C. Abramsky and Beryl J. 
Williams (London: Macmillan, 1974), 161-64, for a more complete discussion of these 
early feelers. 

16. NSR, 2. 

17. See Roberts, Unholy Alliance, 124-27, for the opposing argument that the 
Soviets had no real desire in April to improve relations with Germany. 

18. Watt, How War Came , 231. 

19. Weber, 144-47. 

20. See Dallin, Foreign Policy, 223, and Carr, German-Soviet Relations, 133, for 
more details. 

21. Read and F isher, 74. 

22. “Weltrohstoffmarkte und Aufrustung, Kautschuk,”Der Vietjahresplan, 20 April 
1939, 528-29. 

23. BA, R 24/82, 3-5. 

24. BAMA/OKW/WiRiiAmt/Ro, “Anlagen zum Kriegstagebuch der Gruppe V 
(Mineralolversorgung) 1935-1940,” RW 19/347, 138. 

25. Watt, How War Came, 113. 

26. See Winston Churchill, The Gathering Storm, vol. 1 of The Second World War 
(New York: Bantam, 1948), 327-28, for the argument that the dismissal was a clear pro- 
German signal and Weinberg, Germany and the Soviet Union, 24, for the view that this was 
instead a move toward neutrality and an invitation to both sides. 

27. Read and Fisher, 71. 



T alking About T alking 51 


28. NSR, 3. 

29. PA/Schnurre, Leben, 59. 

30. Read and Fisher, 75. 

31. PA/Schnurre, Leben, 73-75. 

32. Ernst Kostring, DermilitarischeMittlerzwischen dem DeutschenReich undder 
Sowjetunion 1921-1941, ed. HermannTeske(Frankfurta. M.: E. S. Mittleru. Sohn, 1966), 
135-36. 

33. NSR, 5. 

34. Roberts, Soviet Union, 75-76. 

35. PA/Schnurre, Leben, 75-76. 

36. NSR, 6. 

37. Hilger and Meyer, 297. 

38. DGFP, D, 6: 589, doc. 441. 

39. NSR, 15. 

40. Weber, 200. 

41. NSR, 14-15. 

42. DGFP, D, 6: 626, doc. 463. See Alexander Werth, Russia at War, 1941-1945, 
1964 (New York: Carroll and Graf, 1984), 23, for the opposing argument that this speech 
was actually an attack against Germany. 

43. DGFP, D, 6: 628, doc. 465. 

44. FRUS, 1939, 1: 322-23. 

45. DGFP, D, 6: 687, doc. 499. 

46. See DGFP, D, 6: 687, doc. 499, n. 3 & 4, for Schulenburg and Hilger. For 
Kbstring, see Weinberg, Foreign Policy, 1937-1939, 603, and Kostring, 136-37. 

47. NSR, 21. 

48. DGFP, D, 6: 711, doc. 514. 

49. NSR, 22-23. 

50. DGFP, D, 6: 731, doc. 530. 

51. Weinberg, Foreign Policy, 1937-1939, 604. 

52. DGFP, D, 6: 788, doc. 568. 

53. DGFP, D, 6: 821, doc. 596. 

54. NSR, 24-25. 

55. NSR, 27. 

56. DGFP, D, 6: 802, doc. 576. 

57. NSR, 25. 

58. FRUS, 1939, 1: 329. 

59. NSR, 28-30. 

60. Watt, How War Came, 379. 

61. DGFP, D, 6: 870-71, doc. 628. 

62. DGFP, D, 6: 889, doc. 642. 

63. NSR, 31. 

64. NSR, 32. 

65. DGFP, D, 6: 936-38, doc. 685. 

66. Carl Schorske has argued that the change in locations for the economic 
negotiations from Moscow to Berlin was a concession by the Soviets because Schulenburg 
originated the idea (Schorske, 505). But Schulenburg had suggested and Schnurre and 
others had rejected Berlin as the negotiating site because they all saw it as a concession to 
the Soviets. 



52 Feeding the German Eagle 

67. NSR, 32. 

68. DGFP, D, 6: 955, doc. 700. 



Chapter 4 


Restored Economic 
Partnership 


Although the two sides were finally talking again, the Soviets continued to hold 
some of their distance during the next few weeks. The longer Stalin could keep the 
Allies in the game, the higher the stakes he could play for with the Germans. Who 
knew? Perhaps he might actually receive a better deal from the West after all. For 
his part, Hitler was running short of time and short of options, and by late July the 
German efforts to reach an understanding with the Soviet Union were becoming 
more and more intense. 

DINING OUT, JULY 26 

The reasons for the German sense of urgency were fairly obvious. First, the 
war in Poland was scheduled to begin on August 25, leaving only one month to 
clarify relations with the USSR. With Japan lost as a close ally, Italy shaky, and 
the fortifications in the west far from complete, 1 Germany needed a political 
agreement with the USSR in order to intimidate the West into submission if 
possible or to fight the West if necessary. 

At the very least, Germany needed some sort of understanding with the Soviet 
Union in order to head off an unlikely but still potential Anglo-Soviet agreement. 
With the new English proposals of July 23 and secret new information from July 
25 that the West was about to send a mission to the Soviet Union to carry out 
military talks, 2 Germany could not afford to wait it out on the sidelines. 

Germany’s economic situation also continued to dictate a much closer 
relationship with the huge empire to the east. For example, an August report from 
the Office for War Economy Planning argued that in the case of a war that 
included the USSR as hostile, Germany and Italy would fall short of their 



54 Feeding the German Eagle 


mobilization requirements by 9.9 million tons of oil and 260,000 tons of 
manganese. 3 Furthermore, Germany was, among other things, still importing 20 
percent of her foodstuffs, 66 percent of her oil, and 80 percent of her rubber. 4 At 
the same time, Germany possessed stocks of rubber sufficient only for two to three 
months of war and oil sufficient for only three to six months. 5 Since the English 
blockade would cut off most of the sources of these materials and since the Soviet 
Union was practically the only potential supplier for many of these items, an 
August report from the Office for Economic Development concluded that “making 
our greater economic sphere blockade-proof can only be achieved through close 
economic cooperation with Russia.” 6 

These military, political, and economic concerns all meant that Hitler had to 
strike a deal with Stalin, and quickly! As the point man for the economic 
negotiations around which everything else revolved, Schnurre was literally “on 
call” twenty-four hours a day and was bombarded by question after question from 
Ribbentrop and the Fiihrer. One time, Ribbentrop even tracked him down at a 
Charlottenburg restaurant where Schnurre was having dinner with his mother and 
brothers. 7 

This German desire for speed resulted in a series of meetings over the next 
two weeks to finalize the economic arrangements and to lay the groundwork for 
a political and military understanding. Throughout, the Germans were the 
pursuers, despite some continuing hesitations, and the Soviets were the pursued. 
Both realized that it was still the USSR that was in control of the situation. 

The first few encounters were relatively minor. On July 24, for example, 
Astakhov invited Weizsacker and the Germans to send delegates to an agricultural 
exhibition in Moscow, 8 which the Germans did in the second week of August. 9 
Schnurre’s July 25 memorandum indicated that the economic negotiations were 
focusing on technical questions and were making steady progress on the remaining 
problems. For example, the two sides had already agreed on a seven-year credit, 
currency arrangements, and 60 percent of the goods being shipped by German 
vessels; but they were still a half percent apart on interest rates and twenty million 
RM apart on Soviet raw material shipments. 10 

With a few days of relatively successful bargaining under their belts, the 
Germans decided to begin a “full-court press.” On July 26, Schnurre and his last- 
minute partner, the young Foreign Office official Walther Schmid, met Astakhov 
and Babarin at Ewest’s, a Berlin restaurant, for dinner. Schmid, who had been told 
nothing of the nature of the upcoming conversation, was stunned when Schnurre 
proposed the following three-stage plan 11 : 

Stage One: The reestablishment of collaboration in economic affairs through the credit and 
commercial treaty which is to be concluded. Stage Two: The normalization and 
improvement of political relations.... Stage Three would be the reestablishment of good 
political relations, either a return to what had been in existence before (i.e. the Berlin 
Treaty) or a new arrangement which took account of the vital political interests of both 
parties. This stage three appeared to me within reach. 12 



Restored Economic Partnership 55 


The Soviets readily accepted the agenda. On the other hand, they also 
“emphasized that the tempo must probably be very slow and gradual.” 13 

Over the next week the Soviets seemed remarkably agreeable. Astakhov met 
again with Schnurre on August 1 and laid down two Soviet conditions before 
political talks could begin: the cessation of all anti-Soviet attacks by the German 
media and the signing of a new economic treaty. Schnurre agreed without 
hesitation. 14 On the same day, Babarin, Moscow’s “postman,” dropped off the 
latest Soviet economic proposals, after which Schnurre wrote, “I think we shall 
now manage to conclude an agreement.” 15 Herr “Brickendrop” (as the English 
privately called Foreign Minister Ribbentrop) did cause some consternation to 
negotiators on both sides when he held a somewhat cool meeting with Astakhov 
on August 2, but Astakhov’s August 3 discussions with Schnurre were conducted 
“on very positive lines.” 16 Finally, during Schulenburg’s August 4 meeting in 
Moscow, “Molotov abandoned his usual reserve and appeared unusually open.” 17 
With the economic treaty practically finished, a political agreement seemed right 
around the corner. 

ECONOMIC END GAME, AUGUST 12 

Unhappily for the Germans, they would have to wait an agonizing two more 
weeks for the economic settlement to be approved and then a frantic four 
additional days to reach a political agreement. Even after his successful meeting 
with Molotov, Schulenburg argued that “it will nevertheless take considerable 
effort on our part to cause the Soviet Government to swing about.” 18 Stalin surely 
realized that Germany could ill afford any delays; and the more desperate Hitler 
became, the more likely he would be to pay not only Stalin’s economic price but 
also his political price. In addition, the Soviets had to make absolutely sure that 
a war between the capitalist powers would break out; otherwise, “If another 
Munich were to take place, the German-Soviet treaty would immediately become 
a meaningless piece of paper—or worse.” 19 

Although diplomatic contacts were being reestablished between the two 
powers, most of the negotiations continued to be channeled through the economic 
discussions. On August 5, for example, Astakhov and Schnurre met once again, 
this time to feel out the other side’s response to the previous day’s Molotov- 
Schulenburg encounter. According to Schnurre, “Astakhov . . . infonn[ed] me of 
Molotov’s answer to the questions which I put to him the day before yesterday. (1) 
The Soviet Government were ready, and desirous of continuing the conversations 
with us on the improvement and development of our relations. (2) The Soviet 
Government regarded the conclusion of the credit agreement as the first important 
stage in this direction.” 20 

The negotiations over the next week were carried out in a similar vein—the 
Soviets agreeing in principle to closer relations, but delaying on final closure until 
they were sure the Germans would meet the asking price. On August 7, for 
instance, Schulenburg reported that in the Soviet negotiations with the West, “we 



56 Feeding the German Eagle 


hear that throughout Herr Molotov sat like a bump on a log.” In contrast, 
Schulenburg noted in the margin that Molotov “has been very different toward 
Hilger and me of late; very communicative and amiable.” 21 

In response to these tentatively favorable developments, Ribbentrop called 
Schnurre and Kostring to Fuschl (where the Reich Foreign Minister stayed 
whenever Hitler was at the Berghof) to discuss the next German move. After 
extensive talks that were frequently interrupted by telephone calls to the Fiihrer , 
the Germans apparently decided to make a final push for a settlement. 22 

The Soviets also did their part to lure the Germans forward. During the 
August 10 Schnurre-Astakhov meeting, for example, the Soviet representative 
“mentioned that he had once again received express instructions from Moscow to 
emphasize that the Soviet Government desired an improvement in their relations 
with Germany.” 23 In addition, the two hashed out a series of relatively minor 
technical questions that all but made final the economic arrangement. 24 

Of course, the Soviets still refused to commit themselves completely. With the 
Western military mission about to arrive in Russia, the Soviets had every reason 
to keep the bidding war going, even if the West appeared unlikely to meet the 
Soviet demands. Consequently, the Soviets would delay the signing of the now- 
completed economic treaty for almost ten days until they were sure that they had 
a political agreement as well. So when Astakhov met with Schnurre once again on 
August 12, he emphasized the Soviet desire to execute a far-reaching settlement, 
but explained, “Such a discussion, however, could be undertaken only by 
degrees.” 15 

The Soviet delaying tactics were having their desired effect. Although some 
German studies were raising questions about how much oil, manganese, and so 
forth the Soviets really could send in the short term, 26 German businesses were 
already compiling lists of raw materials they wanted from the Soviet Union and 
of goods they had available to export to the USSR. 27 Regardless of his continuing 
anti-Soviet sentiments, 28 Hitler could not afford to lose Soviet political and 
economic support in case of a war with the West. Every military and economic 
study had argued that Germany was doomed to defeat without at least Soviet 
neutrality. Therefore, Ribbentrop cabled Schulenburg on August 12 with detailed 
instructions for the political negotiations. 29 

THE FINAL GO-AHEAD, AUGUST 19 

While the Soviets had temporarily put the economic talks on hold, the 
political talks now entered a period of furious activity as the Germans tried to 
reach an agreement before the Polish crisis came to a head. Although the always- 
cautious Schulenburg was still advising against “any hasty measure” on August 
14, 30 Hitler had already made up his mind for a quick settlement. That same day, 
Ribbentrop proposed a short visit to Moscow “to set forth the Fiihrer’s views to M. 
Stalin.” 31 

Even though the Germans had obviously put all their cards on the table, the 



Restored Economic Partnership 57 


Soviets still left the Germans guessing for a few more days. On August 15, 
Schulenburg and Molotov met to discuss Ribbentrop’s proposed visit. Although 
Schulenburg reported that “the conversation took a very friendly course and 
Molotov was more candid than before,” 32 Molotov still delayed, arguing that “such 
a trip required adequate preparation in order that the exchange of opinions might 
lead to results.” 33 Ribbentrop responded with an even more specific request to visit 
Moscow and, “if the occasion arises, to sign the appropriate treaties.” 34 

With war imminent, the German cards on the table, and the Allies still 
apparently reluctant, the Soviets finally revealed their own hand and accepted 
Ribbentrop’s offer. During his August 17 meeting with Schulenburg, Molotov 
offered a three-stage process for establishing closer relations: (1) signing the 
economic agreement, (2) negotiating the terms of a nonaggression pact, and (3) 
having Ribbentrop visit Moscow to sign the final deal. 35 The same day, Voroshilov 
adjourned the military negotiations with the West. Still in question was the speed 
with which Molotov’s three steps would be handled, but the die had clearly been 
cast. 

Schulenburg’s report of his meeting with Molotov arrived on the morning of 
August 18, shifting the economic negotiations back into high gear as the Germans 
raced to complete the first part of the process as quickly as possible. The final 
treaty appears to have been ready by noon on August 19. But suddenly the Soviets 
went back into their “stall defense.” The Soviets called at 4:00 P.M. to say that they 
could not sign that day, much to Schnurre’s consternation. 36 

At the same time, Molotov was telling Schulenburg that Ribbentrop could not 
visit Moscow until at least a week after the economic treaty was signed. 37 The 
Soviets appear to have been giving the West one final chance to match the German 
bid. 38 As in the past, however, the Poles were unwilling under almost any 
circumstances to permit Soviet troops to enter Poland, and the West was equally 
unwilling to make the Poles change their position. Without a compromise on this 
issue, any possible arrangment between the USSR and the West became mute. 39 
Therefore, at 2:00 A.M. on August 20, the Germans’ agony of waiting ended, and 
the economic agreement was signed by Schnurre and Babarin in Berlin. 40 

The terms were as follows. Over the next two years, the Germans would 
accept 200 million RM in new orders 41 and would export about 60 million RM in 
“current business” (trade covered by the earlier clearing agreements) and 180 
million RM in “new business” (expanded trade resulting from the new treaty). For 
their part, over the next two years, the Soviets would export 60 million RM in 
“current business,” 180 million RM in “new business,” and another 200 to 300 
million RM in repayment for old and new credits. Schnurre estimated that over the 
next few years the total trade might jump to almost 1 billion RM! 42 As usual, the 
Soviets would supply raw materials in return for German manufactured goods. 

Contemporaries and historians have had mixed opinions about the 
significance of this new economic partnership. One school of interpretation has 
asserted that the German war economy would have quickly collapsed without 
Soviet aid. 43 Now, however, “the threat of the blockade . . . had been overcome” 



58 Feeding the German Eagle 


by the August treaties. 44 Preventive-war theorists have gone even further with this 
theory. Stalin now had almost complete control of the German war economy and 
could effectively blackmail and manipulate Hitler: “By skillfully apportioning 
Soviet aid Stalin had it in his power to save Germany from defeat, but also to 
prevent them from achieving victory and so make the war drag on till both parties 
were exhausted, while the Soviet Union carried on rearming in safe neutrality in 
order to have the last word.” 45 

On the other hand, the terms of the understanding were still relatively limited, 
which has led a third group of historians to claim that the agreement was mostly 
superficial. Since Hitler did not envision a long-term war of attrition, he intended 
these early economic accords to serve primarily as political ammunition to 
overawe the Allies and not to make Germany blockade-proof. 46 

While correct about Hitler’s goals, this last argument is still only a half-truth. 
Schwendemann, for example, is surely right that the Soviet Union could never 
replace all the raw materials that Germany would lose if war with England broke 
out. But the USSR could still offer crucial amounts of vital resources such as oil, 
manganese, and (as a third-party supplier) rubber. Furthermore, as Schnurre 
explained, “The framework now set up represents a minimum,” and both sides 
expected that trade would increase dramatically. 47 

Since the expanding German war economy had an endless appetite that could 
not be satisfied elsewhere, the new Soviet market would play an important role 
regardless of whether a major war developed. Not surprisingly, therefore, Hitler 
and his cohorts tried to bolster German morale by repeatedly emphasizing, and 
often overemphasizing, the importance of this economic agreement to Germany’s 
war-fighting capability. During Hitler’s August 22 meeting with his military 
leaders to discuss the upcoming invasion of Poland, for instance. Hitler 
downplayed the danger from the West, “because we have sources of supply in 
Eastern Europe. . . . The East will supply us with grain, cattle, coal, lead and 
zinc.” 48 Similarly, Hitler could now allay German fears that a new war might see 
a repetition of the past war’s “turnip winters.” 49 

Although clearly not “the last salvation” 50 that some were now claiming, the 
new commercial treaty would end up playing an important role in Germany’s 
ability to weather the first two years of the world war. More immediately, however, 
the agreement also provided the key link to the Nazi-Soviet Pact of August 23. 


NOTES 

1. Read and Fisher, 139. 

2. McSherry maintains that this information was “leaked” to Germany by the 
Soviet Union itself (McSherry, 1: 200-201). 

3. BA, R 24/21, 1-2. 

4. Georg Thomas, Geschichte der deutschen Wehr- und Riistungswirtschaft 
1918-1943/45, ed. Wolfgang Birkenfeld (Boppard: Harald Boldt, 1966), 146. 

5. Klein, 57-58. 

6. BA, R 25/53, 11. 



Restored Economic Partnership 59 


7. PA/Schnurre, Leben, 79-80. This image of Hitler pestering Schnurre about 
details in the economic negotiations contrasts sharply with Schwendemann’s picture of a 
distant and reserved Hitler who knew and cared little about the economic relationship with 
the Soviet Union (Schwendemann, 69). 

8. DGFP, D, 6: 975-76, doc. 714. 

9. DGFP, D, 7: 21, doc. 20. 

10. PA, R 106230 , 452641-42. 

11. Read and Fisher, 124-25. 

12. NSR, 33. 

13. NSR, 33. 

14. Read and Fisher, 134-35. 

15. DGFP, D, 6: 1047, doc. 757. 

16. DGFP, D, 6: 1052, doc. 761. 

17. NSR, 39. 

18. NSR, 41. 

19. Ulam, 273. 

20. DGFP, D, 6: 1067, doc. 772. 

21. NSR, 42. 

22. PA/Schnurre, Die hektischen Tage vom 3. bis 22-/23. August 1939 (Bad 
Godesberg, 1987), 3. Schnurre lost his notes for this meeting, so there is, apparently, no 
documentary record of what was specifically discussed. 

23. DGFP, D, 7: 18, doc. 18. 

24. PA, R 106230, 452654. 

25. DGFP, D, 7: 59, doc. 50. The emphasis is in the original. Schnurre’s report 
stressed the point that the Soviets were willing to negotiate only gradually. 

26. PA/HaPol/Schnurre, “Russland-Aussenhandel der UdSSR 1936-1940,” R 
105314, 14-30. 

27. MA, Presseausschnitt, “Zusammenarbeit mit RuBland 1939-1940,” hd 35.025, 
1-2. The Soviets had already shown interest in construction of high-tech German factories. 
See RWW/Otto Wolff/RuBland, “Ruhrchemie (9.8, 15.8, u. 23.8.39),” 72-41-5, for more 
information on some of these early negotiations. 

28. See Hitler’s famous August 11 talk with Carl Burkhardt in which the Fiihrer 
asserted, “Everything I undertake is directed against the Russians; if the West is too stupid 
and blind to grasp this, then I shall be compelled to come to an agreement with the 
Russians, beat the West, and then after their defeat turn against the Soviet Union with all 
my forces. I need the Ukraine so they can’t starve us out like in the last war” (Noakes & 
Pridham, 2: 739). 

29. Weinberg, Germany and the Soviet Union, 40. 

30. NSR, 46-41. 

31. DGFP, D, 7: 64, doc. 56. The Germans had planned to send Reich Minister 
Frank and Schnurre (DGFP, D, 7:68-69, doc. 62), but Hitler’s desire for a rapid resolution 
to the political talks made it imperative that a central figure like Ribbentrop lead the 
mission to Moscow. 

32. DGFP, D, 7: 87, doc. 79. 

33. NSR, 52. 

34. DGFP, D, 7: 84, doc. 75. 

35. NSR, 60-61. 

36. DGFP, D, 7: 132-33, doc. 123. 



60 Feeding the German Eagle 


37. NSR, 63. 

38. See Ingeborg Fleischhauer, “Die sowjetische AuBenpolitik und die Genese des 
Hitler-Stalin-Paktes,” in Zwei Wege nach Moskau, ed. Bemd Wegner (Miinchen: Piper, 
1991), 32, for the opposing explanation that Stalin still preferred an understanding with the 
West and only now switched course toward striking a deal with Hitler. 

39. Read and Fisher, 213-14. 

40. The treaty was backdated to August 19, released to radio agencies late on the 
twentieth, and announced in the newspapers on the morning of the twenty-first ( DGFP , D, 
7: 152, doc. 135). 

41. Schwendemann and others have sometimes misinterpreted this 200 million RM 
in new orders to mean 200 million RM worth of additional exports and have then criticized 
the Germans for not fulfilling this obligation in a timely fashion. Because of the long lead- 
times for some of the items purchased (ships and factories, for example), these orders 
might not actually be due to be shipped until 1942 or later. 

42. NSR , 84-85. See Appendix B for the complete terms of the August 19 treaty. 
“Current business” totals are based on later German estimates. 

43. For an example of this argument, see Hildebrand, 92. 

44. Perrey, 289. 

45. Topitsch, 42. 

46. See Schwendemann, 6 5, and Bianka Pietrow-Ennker, “Deutschland im 1941 -Ein 
Opfer sowjetischer Aggression? Zur Kontroverse iiber die Praventivkriegthese,” in Der 
Zweite Weltkrieg, ed. Wolfgang Michalka (Miinchen: Piper, 1989), 592-93. 

47. NSR, 84. 

48. As quoted in Noakes and Pridham, 2: 742. 

4 9, Raack, Stalin’s Plans, 217. 

50. This is General Quartermaster Eduard Wagner’s statement as quoted in Muller, 
Tor zur Weltmacht, 333. 



Chapter 5 


Toward an Economic 
Alliance 


After more than four years of negotiations, the economic and military pressures 
of a potential war in Poland had finally forced Hitler to reach a settlement with the 
Soviets and largely on their terms. The Germans had wanted a large credit (500 
million RM or more), short terms (five years at the most), high interest rates (5 
percent or more), lower government guarantees (already at 70 percent), specific 
lists of goods, and a quick signing in Moscow. What they got were a low credit 
(200 million RM), long terms (seven years), higher government guarantees (80 
percent), somewhat vague lists of goods (which the Soviets would later use to their 
advantage), and a late signing in Berlin. Stalin could be and apparently was quite 
happy with the new economic arrangement. 1 For his part, Molotov argued in his 
August 31 speech that “this agreement differs favourably not only from that 
concluded in 1935, but also from all previous agreements, not to mention the fact 
that we have never had any equally advantageous economic agreement with Great 
Britain, France, or any other country.” 2 

The Germans still got some of the vital raw materials that they wanted, but 
they really needed an economic alliance and not just an economic partnership. The 
next six weeks, therefore, saw the Germans push for an even closer economic 
understanding, especially after the war in Poland had begun. For their part, the 
Soviets continued to take advantage of the German predicament to reap economic 
and political benefits at little material cost. 

POLITICAL END GAME, AUGUST 23 

For four years the Soviets had been the ones pursuing a political agreement 
in order to avoid “capitalist encirclement.” Since the end of March, however, it 



62 Feeding the German Eagle 


had been the Germans seeking the political agreement in order to escape a 
different kind of encirclement. Now that the commercial treaty had been signed, 
a political treaty was almost inevitable, though the question of timing still 
remained. On the same evening that the Soviets agreed to the economic 
arrangement, Molotov also informed Schulenburg that Ribbentrop could come to 
Moscow, but only on August 26 or 27. 3 This was still too slow for Hitler, whc 
decided to break the logjam by writing directly to Stalin and requesting that 
Ribbentrop visit on the twenty-second or twenty-third. 4 Stalin apparently 
appreciated the Fuhrer's direct approach and also realized that a political 
understanding with Germany was now or never. 5 According to Albert Speer, Hitler 
received Stalin’s affirmative reply at supper on the twenty-first: “He scanned it, 
stared into space for a moment, flushed deeply, then banged on the table so hard 
that the glasses rattled, and exclaimed in a voice breaking with excitement: ‘ I have 
them! I have them!”’ 6 

The deal was now all but completed, and Ribbentrop flew to Moscow on the 
twenty-second. He almost never arrived. Anti-aircraft units near Velikie Luki 
mistakenly fired at the German Condors but missed. 7 It would not be the last time 
that confusion between the two powers nearly “shot down” the relationship, nor 
would it be the last time that the Germans were thankful for the poor training of 
the Soviet military. Once in Moscow, Ribbentrop negotiated some last-minute 
changes to the documents that had been prepared over the preceeding weeks (to 
which Hitler cabled back his one-word response: “Agreed!”) 8 and signed the final 
accord (along with the secret protocols dividing up Eastern Europe) late the next 
night. 9 Afterwards, Stalin, Ribbentrop, and company exchanged toasts to their 
new-found friendship. At one point, Stalin even took the Reich Foreign Minister 
aside and earnestly whispered, “The Soviet Government takes the new Pact very 
seriously.” 10 

One can question, however, the sincerity of both sides’ commitment to the 
new political arrangement. On repeated occasions. Hitler would refer to August 
23 as “the saddest day” of his life. 11 Similarly, Hitler explained to his generals on 
August 22, “My pact was meant only to stall for time.” Eventually, “we will crush 
the Soviet Union.” 12 Stalin revealed his own secret intentions to Khrushchev: 
“Hitler thinks he’s outsmarted me, but actually it’s I who have tricked him!” 13 

Historians have used these conflicting statements to engage in an endless 
debate over the meaning of the new arrangement. In fact, the political accord bears 
striking similarities to the recent commercial treaty. The Soviets had largely 
controlled the negotiating process and ended up with a limited partnership (with 
possibilities for a closer relationship in the future) in which the Germans would 
do most of the real work in return for seemingly small benefits. Combining the 
two agreements, the Germans had to provide credits up front from which they 
would see no real return for seven years, had to fight a hot war with Poland and 
probably the West, had to give up substantial territory to the USSR, and had to 
undermine their alliances with other Fascist countries. In return, the Soviet Union 
had to export limited raw materials and stay neutral (their preferred strategy 



Toward an Economic Alliance 63 


anyway) in a war that they could be reasonably sure would turn into a long 
struggle between the capitalist powers. This probably seemed a relatively small 
price to Stalin for such a potentially huge payoff. 


WAR BEGINS, SEPTEMBER 1 

But for Stalin to cash in on his prize tickets, he needed to make sure that “the 
capitalist war” actually began. Although probably fairly certain of this outcome, 
given what he knew from his secret sources about German and Allied 
intransigence, Stalin’s signing of the new political arrangement made inevitable 
an already likely struggle. 14 Apparently confident that the war was about to start, 
Stalin ended the now-meaningless military talks with the West. The Western 
officers were quickly hustled out of Moscow and seen off by two Soviet generals, 
who related their version of the departure: “The locomotive whistle blew; the train 
began to move slowly. We turned to each other and without saying a word burst 
into laughter.” 15 

Laughter was not the reaction of the rest of the world to the two Nazi-Soviet 
agreements. While those in Germany and the Soviet Union seemed either 
resigned or even approving of the new venture, everyone else reeled in stunned 
amazement that the two ideological enemies could so quickly become economic 
and political partners. Some Western officials refused to believe that the Pact 
would have any serious effect. 16 Communists around the world did not even know 
what to believe. The Soviets left their movement temporarily without orders. And 
when new orders finally arrived, they called for a direct reversal of previous 
policy. It was all too much for many, especially those few Communists left in 
Austria and Germany, most of whom quit the Party in protest. 17 

Hitler had hoped that this confusion would cause the West to back down from 
its Polish guarantees. 18 Instead, England and Poland signed a military alliance on 
August 25. After that a major war became a foregone conclusion, despite the 
diplomatic flurry of the last week of August and despite Hitler’s continuing 
illusions that the Allies would give in yet again. By September 1, Hitler launched 
Operation White; and the West responded, somewhat reluctantly, by September 
3. The war was on. 

That Hitler did not expect a major war to develop out of the Polish crisis was 
readily apparent from the state of the German economy. Although historians have 
disagreed about Germany’s level of preparedness and its economic strategy in 
September 193 9, 19 most recent analyses have maintained that the Germans had 
been gradually gearing up for a total war in 1942 or 1943. Therefore, “the war in 
Europe began three to four years prematurely. This unexpectedly imposed a ‘total 
war of improvisations’ on the Third Reich.” 20 Germany still had room to intensify 
mobilization of certain areas of the economy where they had surpluses, such as 
machine tools, 21 but on the whole the Reich was by no means ready for a long war. 

One major weakness in the German war economy was its lack of raw 
materials now that access to overseas markets had been cut off. To deal with these 



64 Feeding the German Eagle 


resource problems, the Germans had a series of possible options to choose from: 
(1) rationing, (2) expansion of domestic production in key sectors, (3) drawing 
from stocks, and (4) expansion of supplies from European markets. 22 
Unfortunately for the Germans, since the Reich had already been moving 
gradually toward a total-war economy and since Hitler was always very conscious 
of German public opinion, 23 rationing could accomplish only so much. The second 
option, expanding domestic production, required enormous expenditures. Opening 
up old mines or producing synthetics was very inefficient, created a drag on the 
rest of the war effort, and would take years to have a major effect. Germany also 
could not rely on withdrawing from stockpiles, because there were few stocks to 
begin with. That left the fourth option as Germany’s major hope for economic 
success in a long war—trading for or conquering vital resources. 

Oil and rubber provide two good examples of the dilemma facing Germany. 
Before the war Germany had imported 66 percent of its oil products and 80 
percent of its rubber. 24 How were they to make up the difference, especially if 
military needs began to escalate? The Germans tried to conserve at home. Civilian 
oil consumption was throttled back from about 200,000 tons a month to 71,000 
tons a month by the beginning of 1940. 25 And by May of 1940, military 
consumption of liquid fuels had already reached 68 percent. Military consumption 
of rubber went from 10 to 52 percent during the first month of the war. 26 The rest 
of the economy would take more than two years to catch up to the percentages of 
oil and rubber being mobilized for the war effort by early 1940. 27 In other words, 
Germany was already squeezing out about as much of these resources as it could 
afford, and military consumption percentages could only inch upward during the 
rest of the war. Nevertheless, Germany was still losing ground. 

Option two, expanded domestic production, also failed to solve the problem. 
Although the Germans built a number of plants for synthetic production of liquid 
fuels and rubber, these facilities were very expensive, were very vulnerable to air 
attacks (as raids in 1944 would prove), and took a very long time to construct. 
Synthetic oil production could never keep pace with increasing military demand, 
and large-scale synthetic rubber production did not begin until 1942. Synthetic 
rubber also had some serious disadvantages (poor elasticity, for instance) and had 
to be blended with pure rubber. 28 In short, Germany had to have natural rubber 
and oil, especially during the next three years. 

Option three, withdrawing from stockpiles, was even less promising. Hitler 
had been reluctant to allow a massive effort so early in his plans, and the exporting 
nations had “kept their German customers on a hand-to-mouth basis.” 29 As a 
result, oil stockpiles at the beginning of the war were sufficient only for up to three 
months. 30 Rubber stocks were even worse, at a mere two months. 31 No answer here. 

The first three options still left a large gap to be filled by expanding supplies 
from other European states. Rumania and Hungary could supply most, but 
certainly not all, of Germany’s minimum oil requirements. 32 In the short term, 
Holland might be able to supply Germany’s natural rubber needs; but by the 
summer of 1940 and the German invasion of the Lowlands, that route too had 



Toward an Economic Alliance 65 


been closed. The only other state capable of supplying Germany with substantial 
quantities of oil and rubber (along with other increasingly vital resources such as 
grain, fats, manganese, and platinum) was the USSR. 

Even before the war had begun, German officials were taking an increasingly 
close look at the extent to which the Soviets could supply Germany with crucial 
raw materials. Reactions were mixed. By August 24, interested German firms had 
already sent numerous letters of congratulations on the recent commercial treaty 
to the Soviet trade representatives and seemed eager to reestablish old trading 
links. 33 And by August 25, a euphoric Walther Funk had reported to Hitler that the 
German war economy could now survive the blockade for up to two years (double 
the previous estimates of one year) thanks to the new agreements with the Soviet 
Union. 34 An August 26 study on the history of German-Soviet trade relations 
pointed to the complementary nature of the two economies and argued that “the 
new agreement represents only the beginning of a new stage in trade between 
Germany and Russia.” 35 Another August 26 study asserted that the commercial 
treaty would “provide a powerful new impulse” to German-Soviet trade and place 
the USSR back at the top of the list of Germany’s trading partners. 36 On the other 
hand, an August 25 newsletter on the Soviet war economy warned that 
transportation difficulties and increasing Soviet internal demand would 
significantly reduce the Soviet export potential in grain, oil, and nonferrous 
metals. 37 

The economic relations in the last week before the war also saw generally 
positive signals mixed with occasional signs of impending problems. On August 
26, Babarin and Schnurre signed a confidential protocol to deal with one of the 
many issues (in this case some currency arrangements) left unresolved in the rush 
to complete the first treaty. 38 Only a few days later, however, Schulenburg was 
reminding Molotov that the Soviets still needed to appoint an ambassador to 
replace Merekalov, 39 a trade representative to replace Astakhov, 40 and a military 
attache to fill a long-vacant position. 41 

DIVIDING POLAND, SEPTEMBER 17 

With the war now officially begun, Germany ’ s reliance on Russia became less 
hypothetical and more real. The British blockade left the German economy 
increasingly desperate for a whole host of raw materials from oil to grain to 
various metals. These increasingly practical needs highlighted increasingly 
practical concerns about the details of this new trade relationship. Consequently, 
the early optimism of the Foreign Ministry and German business circles 42 was 
more and more balanced by the pessimism of some WiRuAmt reports. 

The Institute for World Economics submitted one such mixed report to 
General Georg Thomas ’ s WiRuAmt agency in September. 43 This extensive analysis 
argued that Germany could easily meet Soviet demands for machine tools by 
simply switching exports previously scheduled for Britain and the United States 
to the USSR. 44 Increasing imports from the Soviet Union would be more difficult 



66 Feeding the German Eagle 


because of its rising internal demand, its inelastic economy, and its backwards 
transportation network. As the institute’s report concluded, “In general, the 
complementary nature [of the two economies] should not be overestimated.” 45 On 
the other hand, the Soviets at relatively little cost to themselves could help 
Germany with oil, manganese, wood, and perhaps even grain in the short term, 
and might be able to provide enormous aid after a year or two if they were willing 
to cut into their domestic consumption and build up their transport system. 46 

But why would the Soviets make such sacrifices? As the members of the 
Russia Committee had been pointing out for some time, the Third Five-Year Plan 
and new rearmament efforts were creating greater Soviet demand for 
manufactured goods. At the same time, the prospect of a European war was 
pushing England and the United States to scale back their exports of exactly the 
items that the USSR wanted. 47 The new friendship with Nazi Germany also 
alienated Western governments, as did Stalin’s later invasion of Finland. 48 For 
example, more than 50 percent of Soviet exports had gone to countries that ceased 
trade relations with the USSR in September. 49 If Germany increasingly needed 
Soviet resources, the USSR also increasingly needed German machines. 50 

A word of caution is in order in interpreting these German reports on the 
prospects for improved economic relations with the USSR. Officials on both sides 
of the issue may have had ulterior motives in presenting the issue the way that they 
did. The careers of the officials in the Foreign Ministry and Russia Committee, for 
example, could depend on closer relations with the USSR, perhaps contributing 
to their sometimes rosy scenarios for German-Soviet trade. The WiRuAmt officials, 
on the other hand, wanted more emphasis on creating a “total-war” system under 
their own auspices. Easy access to Soviet raw materials would undermine their 
plan to ratchet up the war economy. 

The truth, therefore, probably lies somewhere in the middle of these 
estimations. If the Soviets refused to make any changes in their current foreign 
trade and internal demand, there would be limited surpluses available to the 
Germans, except in a few vital areas such as oil or manganese. If, on the other 
hand, the Soviets were willing to transfer their current trade with England and the 
United States and also cut into their domestic supplies, then Germany would have 
access to substantial and perhaps even decisive quantities of raw materials. It all 
depended on how eager Stalin was to cooperate with Germany and at what price. 
And that depended not only on the Soviet economic situation but also on what 
happened in the war. 

Stalin, along with most European military analysts, seems to have assumed 
that the “capitalist war” would develop into a World War I—style slugfest and drag 
on for awhile. 51 As long as the fighting in Poland raged, Stalin saw no real reason 
to side too closely with his new partner and preferred continuing his role as the 
outside arbiter. Herwarth, for example, “ventured the opinion that the Soviet 
Government would endeavor to fulfill its commercial agreements with both 
Germany and Poland.” 52 

Unfortunately for Stalin’s plans, the Germans proved the vastly superior force 



Toward an Economic Alliance 67 


during the fighting in Poland. 53 Although the Poles fought hard, they really “never 
had a chance.” 54 As the noted military historian Liddell-Hart explains, “The 
military issue in 1939 can be summed up in two sentences. In the East a 
hopelessly out-of-date army was quickly disintegrated by a small tank force, in 
combination with a superior air force, which put into practice a novel technique. 
At the same time, in the West, a slow-motion army could not develop any effective 
pressure before it was too late.” 55 

Even this relatively easy victory, however, was putting severe pressure on the 
German system. In addition to raw-material shortages, Germany had entered the 
war with a munitions supply of only six weeks 56 and no considerable manpower 
reserve. 57 Consequently, Germany increasingly faced major munitions, personnel, 
and resource crises. 

The Germans were soon looking to their new-found friends in the east for 
both economic and military aid. Schnurre’s September 2 memorandum describing 
Germany’s working program for its economic relations with the USSR laid out a 
four-part plan. First, resolve questions left open by the Commercial Agreement, 
such as the still unsatisfactory (from the German perspective) arbitration and 
delivery terms. Second, expand industrial production so that Germany could 
explore ways to increase the volume of cash transactions. Third, advance the date 
and raise the amount of Soviet raw-material deliveries. Fourth, send Schnurre to 
Moscow to negotiate further terms with Mikoyan. 58 

Various German agencies held a series of meetings over the next two weeks 
to discuss aspects of this plan. A long list of PhJD.s and government officials, for 
example, filed through the WiRtiAmt’s doors to review Soviet raw-material 
production and transportation capabilities. 59 I. G. Farben’s Political Economy 
Section issued its own brief report on transportation routes to Soviet resources and 
pointed out that the Baltic, as the main trade link between the two countries, had 
handled in the early 1930s up to seven times the current tonnage. 60 Mannesmann 
(and presumably other major firms as well) expanded its August list of goods it 
could sell to the Soviets and declared its willingness “to push forward trade with 
Russia with all means possible.” 61 The Foreign Office, among other discussions, 
focused on the possibilities for transit trade from the Far and Near East, and 
soybeans from Manchuria in particular, during a September 6 meeting. 62 

With its typically optimistic tone about the potential of German-Soviet trade, 
the Russia Committee’s September 8 issue of Ostexpress argued that the Soviets 
could free up vast quantities of manganese for export if they expanded their 
mining operations in the Urals and Siberia. 63 A September 12 Russia Committee 
meeting proposed raising Soviet imports from 180 million RM in the first year to 
500 million RM. 64 The committee’s sometimes blind enthusiasm even bubbled 
over into proposals that the Soviets allow transit shipments of German machines 
to foreign buyers and that the Soviets hold a trade show in Moscow where German 
merchants would show off the latest consumer goods that the Soviet people had 
been deprived of! 65 

As the point-man for German-Soviet trade, Karl Schnurre was particularly 



68 Feeding the German Eagle 


busy during this period. Out drumming up support for his Soviet project, Schnurre 
met with Thomas and State Secretary Neumann on September 6 to review the 
availability of Soviet raw materials and the possibilities for expanding cash 
transactions. 66 The next day Schnurre met with German firms Ruhr-Chemie and 
Otto Wolff, who were already deep in discussions with the Soviets, 67 and agreed 
to propose concentrating negotiations for synthetic fuel plants in their hands. 68 

While all these fact-finding discussions were going on, a September 4 meeting 
of the Reich Defense Council, chaired by Goring, debated Schnurre’s proposed 
plans and came up with some preliminary decisions. The council members agreed 
“that further expansion of our economic relations with Russia should be 
undertaken as quickly as possible.” They also agreed to set up a committee of 
various state secretaries responsible for overseeing proposals to widen trade with 
the USSR. Finally, they took up Schnurre’s idea to go to Moscow to negotiate 
further economic arrangements. 69 There appears to have been some hesitation on 
who should lead this mission; but Schnurre eventually got his wish to head the 
delegation, and a proposal was sent to the Soviets on September 7. 70 

Based on Stalin’s actions so far, however, plans for rapid expansion of 
German-Soviet trade seemed unrealizable. During the first week of the war, the 
Soviets appeared unwilling to move beyond the formal requirements of their new 
relationship. On September 2, for example, Babarin was promoted to Head of the 
Soviet Trade Delegation in Berlin to replace the recalled Astakhov. 71 At the same 
time, Voroshilov was reassuring Poland that “the Soviet Union was prepared to 
continue to provide commercial supplies.” 72 Similarly, the new Soviet military 
mission did finally arrive in Berlin on September 2, but Molotov requested that the 
German media play down the event. 73 

After a week of German victories in Poland, however, Stalin had changed his 
mind and began edging closer to Hitler by September 9. If the Vozhd wanted to get 
his slice of the Eastern European pie, he could no longer sit on the fence. In 
addition to being cooperative on such issues as German merchant ships seeking 
refuge in Murmansk 74 and promising to intervene militarily in Poland, 75 Stalin 
now agreed to receive Schnurre’s delegation by September 15. 76 

Although it now appeared that negotiations for more complete economic 
cooperation would soon get under way, some in Germany continued to advise 
caution. A September 9 report from I. G. Farben’s Political Economy Section 
reinforced the points made in the Institute for World Economics analysis. While 
reemphasizing the complementary nature of the two economies and the possibility 
for huge raw material imports in the long run, this report also explained that 
transportation problems and rising Soviet internal demand would make it “almost 
impossible in the short term to raise considerably [Soviet] exports of raw materials 
important to us.” 77 However, if the Soviets thought they could get weapons and 
machines in return, they could easily diminish their internal use of certain key 
items, such as oil, manganese, and chrome, in order to make them available for 
export to Germany. 78 A September 18 meeting of the Reiclisbank concluded even 



Toward an Economic Alliance 69 


more pessimistically that the current commercial treaty “comes close to the 
maximum capacity of both sides.” 79 

These words of caution proved largely correct as even the earliest negotiations 
quickly became mired in practical problems raised by the US SR. A September 13 
meeting of the Import Committee (a special department of the Russia Committee 
that became a semi-official section of the Reich Economics Ministry on October 
10) highlighted some of the general problems in negotiating with the Soviets: 
difficult payment procedures, drawn-out negotiations, lack of government 
guarantees for cash transactions, transportation questions, and suddenly high 
Soviet prices (an average of 50 percent above previous demands). 80 The USSR also 
quickly tried to pit German firms against one another, a problem that the German 
government would attempt to counter by limiting the number of firms that could 
send representatives to Moscow. 81 For example, Schnurre had tentatively agreed 
to allow Otto Wolff to handle all negotiations concerning synthetic oil plants, but 
a rivalry quickly developed with Gutehoffnungshutte AG (GHH). Even though 
both firms wanted the contract, both found the early going extremely difficult, 
with the Soviets demanding completion of the two-to-three year project in one 
year. 82 

For their part, the Germans decided to postpone Schnurre’s trip until after the 
political fallout from the Polish situation had settled. Schnurre met with 
Ribbentrop on September 14 and 15 to discuss plans for a “large-scale program for 
raw material deliveries, exceeding many times the figures of the Agreement of 
August 19.” Although both realized the transportation problems such an increase 
in trade might cause, Ribbentrop (probably under pressure from political and 
military officials) raised yet another hurdle when he ruled that “compensation in 
the form of additional machine tool deliveries is out of the question.” 83 

The Germans did not have to wait long for the political crisis to come to a 
head. Having edged toward Hitler’s camp on September 9, Stalin finally stepped 
decisively over the line on September 17 when the Soviet Union entered Poland 
in order “to protect its Ukrainian and White Russian brothers and make it possible 
for these unfortunate people to work in peace.” 84 It took awhile, however, for 
everyone in Germany to get the news that the Soviets were now on the German 
side. For instance, having received the first news of the Soviet intervention in 
Poland, Major-General Jodi, Chief of the German Armed Forces Operations Staff, 
replied, “Against whom?” 85 

COLLUSION IN THE KREMLIN, SEPTEMBER 28 

With the Nazi-Soviet Non-Aggression Pact now sealed by Polish blood, the 
way appeared open to forming not just an economic partnership but an economic 
alliance. As the first German studies had already shown, however, both sides 
would have to undertake major sacrifices to achieve such a close working 
relationship. The Soviets would have to cut into domestic consumption of various 
raw materials, and jealous German political and military officials would have to 



70 Feeding the German Eagle 


give up some of their machines and weapons. So far, neither side seemed willing 
to make the necessary concessions. 

But it was the Germans who were blockaded and at war, and therefore it was 
still Hitler who needed Stalin more than Stalin needed Hitler. Consequently, the 
Germans continued their intensive investigation of the possibilities for expanded 
trade between the two powers. More experts reviewed the general transportation 
problems for the WiRilAmt , 86 while other agencies focused on the vital 
transportation link to Rumania (which might now go through Soviet territory) 87 
and a possible connection to the Far East. 88 Numerous businesses began sending 
(or trying to send) representatives to Moscow 89 to negotiate deals on everything 
from stranded ships in Murmansk, 90 to oil, 91 to synthetic fuel plants, 92 to war 
materials. 93 And general reports continued to emphasize the enormous Russian 
raw-material potential 94 but also to caution that “the Soviet Union has probably 
reached nearly the limit of its capacity in promising us raw material deliveries to 
a value of 180 million RM within 2 years.” 95 

Given its potential importance to the German war economy, Soviet oil became 
the focus of an extensive Army High Command ( OKH) report from Dr. Erwin 
Haudan of the National Defense Institute at the University of Berlin. This study 
estimated that the Soviets, despite increasing internal demand, could send up to 
two million tons of oil to Germany in the first year alone and much more in later 
years. 96 Although there were problems with each of the four possible routes (Baltic, 
Poland, Black Sea-Rumania, Black Sea-Mediterranean) by which this oil could 
be shipped to Germany from its main source in the Caucasus, the report concl uded 
that the combination of all four should be adequate to handle the estimated load. 97 

Despite these still cautiously optimistic analyses, the reaction of the German 
business negotiators “on the ground” was increasingly negative. Although the 
German representatives for one of the first completed contracts (2.5 million RM 
for 700,000 sheepskins and goatskins) described the Soviets as “extraordinarily 
accommodating,” 98 this was more the exception than the rule. Typically, German 
business representatives were quickly complaining of stalled negotiations, difficult 
terms, and outrageous prices. As early as September 13, the Russia Committee was 
already pleading with German firms to be flexible with these high Soviet demands 
because of the long-term possibilities in German-Russian trade. 99 

A couple of major meetings were held to sort out these various bits of 
information and arrive at some further policy decisions. On September 21, for 
example, Goring, Thomas, Schnurre, and others debated negotiating strategy. In 
order to improve his bargaining position, Schnurre wanted German war-material 
deliveries to begin as soon as possible “so that the Soviets can see that we are 
serious.” 100 As usual, the military and political officials were reluctant to endorse 
Schnurre’s proposal. Instead of looking to sell weapons to the Russians, Admiral 
Raeder (among other things on his wish list from the Soviets) had already raised 
the issue with the Ftihrer of buying submarines from the USSR. 101 

With the war in Poland over and Hitler already pressing for a clash with the 
West, 102 the time had come to resolve the economic and other issues left open by 



Toward an Economic Alliance 71 


the August treaties. To arrange the Boundary and Friendship Treaty, Ribbentrop, 
with Schnurre and other economic negotiators in tow, made a second trip to 
Moscow. Other than Schnurre accidentally receiving the initial red-carpet 
treatment at the airport instead of Ribbentrop, 103 the proceedings went exactly as 
Stalin had planned. 104 

The resulting agreement, signed at 5:00 A.M. on September 29 but backdated 
to September 28, contained four important sections pertaining to future economic 
negotiations. First, a confidential protocol stated that “the U. S. S.R. shall place no 
obstacles in the way of Reich nationals and other persons of German descent 
residing in the territories under its jurisdiction, if they desire to migrate to 
Germany or to the territories under German jurisdiction.” 105 Left unclear was 
whether “no obstacles” meant that these estimated 400,000 people could leave 
with all of their roughly one billion RM in assets or not. 106 

Also unclear were the statements in an exchange of public letters between 
Ribbentrop and Molotov about the future of German-Soviet economic 
collaboration. The Soviet Union vowed to “supply raw materials to Germany, for 
which Germany, in turn, will make compensation through delivery of 
manufactured goods over an extended period. Both parties shall frame this 
economic program in such a manner that the German-Soviet exchange of goods 
will again reach the highest volume attained in the past.” 107 But what did “an 
extended period” mean? Manufactured goods from Germany would obviously take 
years to produce and ship, compared to the weeks or months for Soviet raw 
materials. But how long should the Soviet Union have to wait to balance the 
books? 

In a second exchange of letters, this time a confidential one, Molotov also 
promised “that German transit traffic to and from Rumania by way of the Upper 
Silesia-Lemberg-Kolomea railroad line shall be facilitated in every respect. . . . 
The same will apply to the German transit traffic to and from Iran, to and from 
Afghanistan, as well as to and from the countries of the Far East.” 108 Again, what 
did “in every respect” mean? Even in this confidential letter, nothing had been 
clearly spelled out. 

More concretely, Stalin agreed to supply Germany with an additional amount 
of oil equal to that produced by the disputed but now Soviet-occupied Polish fields 
of Drohobycz and Boryslav in return for hard coal and steel tubing. 109 Since the 
Soviets had captured seventy percent of Polish oil production, 110 this was really no 
concession on Stalin’s part and made the Germans just that much more dependent 
on Soviet economic support. 

Stalin had gotten the territorial settlement he wanted (compatible population, 
oil regions, and the direct route from Germany to Rumania) at the price of 
minimal military effort and vague promises of economic (and political) support. 111 
It had all been so very easy. In fact, Stalin apparently suspected (and suspected 
correctly) that the deal had been too easy, that Hitler had given in so quickly 
because he intended to take it all back as soon as possible. 112 As the American 
reporter William Shirer concluded at the time, however, “Russia is the winner in 




72 Feeding the German Eagle 


this war so far and Hitler is entirely dependent upon the good graces of Stalin, who 
undoubtedly has no good graces for anyone but himself and Russia.” 113 

NOTES 

1. According to Valentin Berezhkov, the future First Secretary in the Berlin 
Embassy, “Stalin believed that the trade treaty was more important to Moscow than a 
nonaggression pact” (as paraphrased in Philbin, 43). See also PA/Schnurre, Leben, 84. 

2. As quoted in Jane Degras, ed., Soviet Documents on Foreign Policy, 3 vols. 
(London: Oxford University, 1953), 3: 367. 

3. NSR, 63. 

4. NSR, 66-67. 

5. NSR, 68-69. See also Weinberg, Germany and the Soviet Union, 45. 

6. Speer, 223. 

7. Dmitri Volkogonov, Stalin: Triumph and Tragedy, trans. Harold Shukman (New 
York: Grove Weidenfeld, 1991), 386. 

8. NSR, 72. 

9. For the full terms of the agreement, see NSR, 76-78. 

10. NSR, 76. 

11. As quoted in Dallin, Foreign Policy, 39. 

12. As quoted in Alan Clark, Barbarossa, 1965 (New York: Quill, 1985), 25. 

13. Nikita Khrushchev, Khrushchev Remembers, trans. & ed. Strobe Talbott 
(Boston: Little, Brown, 1970), 132. 

14. See B. H. Liddell-Hart, History of the Second World War (New York: Putnam, 
1971), 13, for the argument that the Pact was the “green light” for World War II. For the 
less-widely held counterview that the Pact had relatively little influence in unleashing the 
war, see John Lukacs’s argument in David Pike, The Opening of the Second World War 
(New York: Peter Lang, 1991), 56-57. 

15. As quoted in Dallin, Foreign Policy, 53. 

16. FRUS, 1939, 1: 343-44, and Dallin, Foreign Policy, 63. 

17. Read and Fisher, 294. For the effect of the Pact on individual members of the 
Party, see the various vignettes in Wolfgang Leonhard, Betrayal: The Hitler-Stalin Pact of 
1939 (New York: St. Martin’s, 1989). 

18. McSherry, 1:232-33. 

19. See the Introduction for more information on this historiographical debate. 

20. Jurgen Forster, “The Dynamics of Volksgemeinschaft. The Effectiveness of the 
German Military Establishment in the Second World War,” in The Second World War, vol. 
3 of Military Effectiveness, eds. Allan R. Millett and Williamson Murray (Boston: Allen 
Unwin, 1988), 182. See also Rolf-Dieter Muller, “Die Mobilisierung der deutschen 
Wirtschaft fur Hitlers Kriegsfuhrung,” in Organisation und Mobilisierung des deutschen 
Machtbereichs, vol. 5a of Das Deutsche Reich und der Zweite Weltkrieg, by Bernhard 
Kroener et al. (Stuttgart: Deutsche Verlags-Anstalt, 1988), 349-50. 

21. “Machine Tools and Machinery as Capital Equipment,” in United States 
Strategic Bombing Survey, 1945 (Washington D.C.: GPO, 1947), 24-25. 

22. USSBS, Effects, 70. 

23. See Thomas, 160, for his complaints about the Party’s “psychological” barriers 
to total war. 

24. Thomas, 146. 



Toward an Economic Alliance 73 


25. “Oil Division, Final Report,” in United States Strategic Bombing Survey, 1945 
(Washington D.C.: GPO, 1947), 25. 

26. “Ministerial Report on German Rubber Industry,” in United States Strategic 
Bombing Survey, 1945 (Washington D.C.: GPO, 1947), 14. 

27. See Appendix A, Table 3.6, for more information on military consumption 
percentages. 

28. BAMA/OKW/WiRuAmt/Ro/Hedler, “Kautschuk und die Versorgungslage im 
Kriege (1941) /’RW 19/1467, 12-13 & 22-23. 

29. USSBS, Oil, Final Report, 17. 

30. USSBS, Oil, Final Report, 17. See Appendix A, Table 3.2. for figures on 
German oil stocks. 

31. BAMA, RW19/1467, 27. See Appendix A, Table 3.2. for more information on 
German rubber stocks. 

32. USSBS, Oil, Final Report, 25. 

33. PA/BM, “Politische Beziehungen der Sowjetunion zu Deutschland 1939-1940,” 
Fach 65, 2: 6971. 

34. Muller, Mobilisierung der deutschen Wirtschaft, 363. 

35. PA/HaPol/Schnurre/InstitutfurKonjunkturforschung, “Trade Relations between 
Germany and Russia (26.8.39),” R 105314, 3. 

36. BA/EfA/Lehman, “Allgemeine Angelegenheiten (26.8.39),” R 9/1/634,2: 149. 

37. BAMA/OKW/WiRuAmt/Wi, “Nachrichtenblatt: Wehrwirtschaft UdSSR Nr. 1 
(25.8.39),” Wi/ID.19, 1. 

38. DGFP, D, 7: 345^6, doc. 340. 

3 9. Merekalov had been recalled on Apri 119, survived an eighteen-year stint in the 
psychiatric wards from 1940 to 1958, and died peacefully in 1983 (Roberts, Unholy 
Alliance, 126). 

40. Astakhov had been recalled in August and later died in a Soviet prison camp in 
late 1941 (Read and Fisher, xviii). 

41. DGFP, D, 7: 419-20, doc. 425. 

42. For yet another glowing assessment of the future of German-Soviet economic 
relations, see “Grundlagen und Moglichkeiten des Wirtschaftverkehrs mit Sowj etruBland,” 
Die deutsche Volkswirtschaft, 1 September 1939, 932-34. 

43. BAMA/OKW/WiRuAmt/Geheim/Institut fur Weltwirtschaft, “Das russische 
Wirtschaftspotential und die Moglichkeit einer Intensivierung der deutsch-russischen 
Handelsbeziehungen (Sept. 1939),” RW 19/Anhang1/700 u. 702. For a similar analysis, see 
also BAMA/OKW/WiRtiAmt/Wi/Dr. Tomberg, “Der AuBenhandel in den 
wehrwirtschaftlichen Vorbereitungen Deutschlands vor den gegenwartigen Krieg,” RW 
19/1496,34-35. 

44. BAMA, RW 19/Anhang 1/702, 32-34. This contemporary evaluation is 
reinforced by a similar USSBS analysis after the war (USSBS, Machine Tools, 24-25). 

45. BAMA, RW 19/Anhang 1/702, 35. 

46. BAMA, RW 19/Anhang 1/702, 31 & 47. 

47. Perrey, 292-93. 

48. Zeidler, 99. 

49. Dallin, Foreign Policy, 419. 

50. See Appendix A, Tables 1.3 and 1.4, for a comparison of Soviet trade with 
England, Germany, and the United States from 1913 to 1940. 

51. McSherry, 1: 251, and Ulam, 280-82. 



74 Feeding the German Eagle 


52. FRUS, 1939, 1: 345. 

53. For a brief analysis of Soviet thinking during these first two weeks of the war, 
see Jonathan Haslam, “Soviet Foreign Policy 1931M1: Isolation and Expansion,” Soviet 
Union/Union Sovietique 18, no. 1-3 (1991): 106-7. 

54. Michael Lyons, World War II: A Short History (Englewood Cliffs, NJ: Prentice 
Hall, 1989), 77. 

55. Liddell-Hart, Second World War , 32. 

56. Carroll, 177-78. 

57. Forster, Dynamics of Volksgemeinschaft, 188. 

58. DGFP , D, 7: 526-27, doc. 557. 

59. BAMA/OKW/WiRiiAmt/Wi, “Wochenberichte,” RW19/240, 6-8. 

60. PA/HaPol/Schnurre/IG/V owi, “Der Deutsche Rohstoffbezug aus der UdSSR und 
Stidosteuropa (4.9.39),” R 105314 , 1-3. 

61. MA/Presseauschnitt, “Zusammenarbeit mit RuBland 1939-1940 (5.9.39),” M 
35.025, 1. 

62. PA, R 106230, 452678. 

63. PA/HaPol/Schnurre/RA/Ostexpress, “Die Manganerzgewinnung und -ausfuhr 
der Sowjetunion (8.9.39),” R 105315. 

64. BAMA/OKWAViRuAmt/VO, “Berichte (14.9.39),” RW45/13b, 3. The Russia 
Committee had already noted, by the way, that the Soviets appeared particularly interested 
in acquiring German weapons, a point that would cause many problems later in the 
negotiations. 

65. BAMA,RW45/13b, 3c. 

66. BAMA/OKWAViRtiAmt/Stb, “Kriegstagebuch (6.9.39),” RW 19/163, 12, and 
BAMA/OKWAViRuAmt/Ro, “Wochenberichte (6.9.39),” RW 19/335, 6. 

67. RWW/Otto Wolff/RuBland, “Letter from Gasper (7.9.39),” 72-41-5, 1-3. 

68. RWW/Otto Wolff/RuBland, “Aktennotiz uber Besprechungen wegen des 
Russland-Geschafts (7.9.39),” 72-41-5. 

69. DGFP,D, 8:7, doc. 10. See alsoBAMA, RW 19/163, 11-12. 

70. DGFP, D, 8: 21, doc. 21. 

71. According to a notice inD/e Ostwirtschaft, Oct/Nov 1939,135, J. S. Kormilizyn 
was named to fill Babarin’s old position as Deputy Trade Representative at the beginning 
of October. 

72. FRUS, 1939, 1: 348. 

73. DGFP, D, 7: 509, doc. 534. 

74. PA/HaPol/Clodius, “Schulenburg Telegram (8.9.39),” R 105999. 

75. By September 10, however, Molotov had to backpedal slightly on when the 
Soviets would move into Poland, probably because the speed of the German advance had 
caught the Soviets by surprise (NSR, 91). 

76. PA/HaPol/Clodius, “Schulenburg Telegram (9.9.39),” R 105999. 

77. BAAP/IG/Vowi, “Der AuBenhandel Deutschlands mit der Sowjetunion 

(9.9.39) ,” 80 IG 1/A 3746, 3. Schnurre’s Handakten at the Foreign Ministry Archives in 
Bonn also contain a copy of this report (PA, R 105314). 

78. BAAP, 80 IG 1/A 3746, 4. 

79. BAMA, RW45/13b, 5. 

80. BA/RK/RA,“AuswartigeAngelegenheiten(21.9.39),”R43////i4SPa, 149-53. 
Forthe Foreign Office copy ofthis report, see PA/HaPol/Schnurre, “Russland-Ostwirtschaft 

(22.9.39) ,” R 105315, 1-12. 



Toward an Economic Alliance 75 


81. BA, R43/II/1489a, 153. 

82. RWW/Otto WolffTRuBland/Schroeder, “Aktennotiz liber eine Besprechung bei 
der Handelsvertretung der U.d.S.S.R. (15.9.39),” 72-41-5, 1-3. 

83. DGFP , D, 7: 82, doc. 82. 

84. NSR, 95. 

85. Read and Fisher, 334. 

86. BAMA/OKW/WiRiiAmt/Wi, “Wochenberichte,” RW19/243, 4-6. 

87. DGFP, D, 7: 103-4, doc. 102. 

88. PA, R 106230, E041461, and BAMA, RW 19/243, 15-16. 

89. By September 20, the Americans had already noted the increasing number of 
German industrialists and engineers in the Soviet capital ( FRUS, 1939,1:478-79); and by 
September 29, the Russia Committee was again pleading that interested firms work through 
established channels and not send new (and probably unqualified) representatives to 
Moscow (BA, R 9/1/634, 2: 82). For a list of all the businesses who sent representatives to 
the USSR over the next months and what their interests were, see Eichler, 98-100. See 
also the lists of treaties and businesses involved in making them in Appendix A, Table 5.2. 

90. BAMA, RW 19/243, 9, and BAMA/OKW/WiRiiAmt/Stb, “Aktenvermerk iiber 
eine Besprechung bei General Thomas mit Generaldirektor Hoffmann und Direktor 
Hecking von der Hapag am 20.9.1939,” RW 19/171, 122-23. 

91. BAMA, RW 19/243, 7. 

92. BAMA/OKW/WiRiiAmt/Stb, “Aktenvermerk iiber eine Besprechung im 
RWiMin am 21.9.1939,” RW 19/560, 1-2. 

93. BAMA, RW 19/560, 2-4. The Germans assumed the Soviets would ask only for 
the 50 million RM in war goods stipulated under the 8/19 agreement. Furthermore, they 
believed the Soviets wanted only licenses and technology, not the actual weapons. Both 
assumptions proved incorrect. 

94. BA/RFM/RA, “Die Rohstofflage der UdSSR,” R 2/16467, 1-16. 

95. Schulenburg, cautious as usual, offered this assessment on September 20 
(DGFP, D, 8: 108-9, doc. 108). 

96. BAMA/OKH, “Die Treibstoffversorgung Deutschlands aus RuBland,” RH 
2/2371, 23-24. 

97. BAMA, RH2/2371, 11-22. 

98. BAMA/OKW/WiRiiAmt/Stb, “Zusammenfassender Uberblick iiber die 
Wirtschaftsberichte der Wirtschaftsinspektionen (20.9.39),” RW 19/69, 56-57. 

99. PA, R 105315, 12. 

100. BAMA, RW 19/560, 3. 

101. Fuehrer Conferences on Naval Affairs, 1939-1945 (Annapolis: Naval Institute, 
1990), 43. The German Naval Attache in Moscow, Captain von Baumbach, thought such 
a deal very possible, but Hitler vetoed the idea on October 10. See Kriegstagebuch der 
Seekriegsleitung 1939-1945 (Bonn: E. S. Mittler u. Sohn, 1988), 1: 185, anAFCNA, 47. 

102. For Hitler’s September 27 military conference in which he laid out his plans for 
an early attack in the west, see Martin Kitchen, A Military History of Germany from the 
Eighteenth Century to the Present Day (Bloomington: Indiana University, 1975), 308-9. 

103. See the Introduction. 

104. Read and Fisher, 351, 

105. NSR, 106. 

106. Dallin, Foreign Policy, 94-95 & 98. 

107. NSR, 108-9. 



76 Feeding the German Eagle 


108. NSR, 109. 

109. NSR, 109. Read and Fisher state that this production totalled 30,000 tons a year, 
but was supposed to increase to 500,000 tons a year according to Soviet plans (Read and 
Fisher, 352). 

110. Robert Goralski and Russell Freeburg, Oil and War: How the Deadly Struggle 
for Fuel in WWII Meant Victory or Defeat (New York: William Morrow, 1987), 31. A 
German report in October 1939 claimed that the Soviets now controlled 228,000 tons a year 
of Polish oil production versus 75,000 tons a year for Germany (PA, R 106231, 
E041513—14). 

111. Pike, 111-13. For an opposing opinion, see Ulam, 284-86, where he describes 
the treaty as “a profound humiliation” for the USSR in which “there were no loopholes left 
for future evasions or double-dealing.” 

112. Read and Fisher, 355. 

113. William Shirer, Berlin Diary, 1939-41, 1941 (New York: Popular Library, 
1961), 173-74. 



Chapter 6 


The German Plan 


With these suspicions in mind, Stalin approached the upcoming round of 
economic negotiations somewhat cautiously. Far from being the “honeymoon” 
historians sometimes describe, the Soviet Union showed itself still reluctant to 
make concrete promises, and Germany showed itself still overly optimistic about 
what the USSR would or could provide in the short term. The Germans spent 
much of the month in a futile attempt to push through swiftly an extensive 
economic agreement on the basis of the terms they thought had been laid down in 
the September agreements. They were quickly disappointed, and it would end up 
taking more than four months to negotiate a final economic settlement instead of 
the four weeks that the Germans had hoped for. 


RITTER AND SCHNURRE FLY TO MOSCOW, OCTOBER 7 

If the Germans needed any further incentive to seek a more substantial 
economic agreement with the Soviet Union, Thomas’s depressing September 29 
report to Army Chief of Staff Franz Haider on the state of the German war 
economy confirmed fears that the German military lacked the oil and some other 
raw material stockpiles necessary for a western offensive. 1 Natural rubber stocks 
were particularly short, with synthetic “buna” rubber unable to make up the 
difference. 2 

The Soviet solution to Germany’s economic woes continued to receive 
intensive study as the Germans began putting their initial proposal together. The 
Russia Committee’s newspaper Die Ostwirtschaft, for example, concluded that the 
Soviet takeover of the Baltic states should not endanger German trade with these 
countries because the Soviets had no manufactured goods to sell. 3 1. G. Farben 



78 Feeding the German Eagle 


issued reports on Soviet platinum exports 4 and on problems in the transportation 
system, arguing that some increases in trade were possible, especially via the 
Black Sea, but that transit trade to the Far East was almost out of the question. 5 
The WiRuAmt reported the completion of studies on the Soviet transportation 
system, 6 their raw material production, and their food production, while Thomas 
held meetings with Schnurre, Goring, Ter-Nedden, and a number of German 
businessmen to discuss various aspects of the new trade relationship. 7 

German firms also continued to send representives over to Moscow to 
negotiate, 8 despite continuing Russia Committee warnings that this expanding 
number might actually delay overall progress. 9 During the run-up to the September 
28 treaties, however, business negotiations seemed to be going rather well. The 
Soviets had shown themselves to be “very accommodating” and had scaled back 
many of their earlier high price demands. 10 Similarly, the Soviets soon agreed to 
the construction of a small naval repair base at Teriberka (near Murmansk). 11 
Although militarily meaningless in the long run, Basis Nord was “significant as 
a political symbol.” 12 

But cracks had begun reappearing already by early October, as Schnurre 
complained to the Soviet government about the lack of visas for German 
negotiators, men the Soviets themselves had wanted sent to Moscow. 13 
Furthermore, the Soviets appeared increasingly likely to renail the Czemowitz rail 
line (the direct route from Rumania’s oil to Germany) with their wider spur, 14 a 
move that “would make German transit traffic to Rumania practically 
impossible.” 15 

Despite these renewed signs of difficulty and the continuing reservations 
about Soviet trade potential, the new program cobbled together by October 6 called 
for some joint German-Soviet economic planning and a dramatic increase in 
Soviet shipments during the first year from 180 million RM to 1.3 billion RM! 
The Germans wanted 530 million RM in industrial materials (iron ore, 
phosphates, platinum, etc.), 330 million RM in foodstuffs, 120 million RM in 
lumber, 100 million RM in materials bought from third parties (tin, rubber, etc.), 
and 200 million RM in crude oil. In return, the Germans were willing to offer 810 
million RM in the first year 16 and the rest in capital goods over the next few 
years. 17 

Schnurre, however, had a number of reservations about this program that he 
was supposed to push forward. Although describing the German requests as 
“relatively modest,” he nonetheless contended, “Within the framework of purely 
economic negotiations, the difficulties actually existing in Russia cannot be 
overcome, especially as we demand of the Russians performance in advance. A 
positive achievement can really only be expected, if an appropriate directive is 
issued by the highest Russian authorities, in the spirit of the political attitude 
toward us.” 18 Ter-Nedden seconded Schnurre’s sentiments, describing the 
proposals as “utopian.” 19 In other words, the terms of the treaty were uneven and 
would only be accepted if the Soviets felt politically in debt to the Germans. 

While Schnurre may have thought the terms merely unequal, some historians 



The German Plan 79 


have labelled them “imperialistic” 20 and part of the German “Drang nach Osten ,” 21 
This argument appears hard to accept, especially given the even more extreme 
Soviet terms offered in November. The Germans seem simply to have been setting 
out a high opening bid within the framework of what they thought had been 
arranged in Moscow—early Soviet shipments in return for long-term German 
capital goods. The individually requested amounts had already been scaled back 
on the basis of some thorough studies and were now (barely) within Soviet 
capabilities. And the overall total was still less than what it had been in the late 
1920s. Of course, the terms were still totally unacceptable to the Soviets, but then 
Ribbentrop and Schnurre both seem to have calculated that the Soviets had 
received the better end of the political settlement and should compensate the Reich 
economically. 22 

So far, political relations did appear quite friendly, with Stalin supporting 
Hitler’s October 6 call for peace. 23 But this backing still meant very little in 
practical terms and could not automatically be counted on to counterbalance the 
German economic demands. So Schnurre departed for Moscow with a plan, a 
twelve-member delegation, 24 and a new chief negotiator (Ambassador Karl 
Ritter), 25 but also lots of doubts and questions. 

THE SOVIET SLOW AND STEADY, OCTOBER 22 

Unfortunately for the Germans, their hopes for a quick economic settlement 
based on Soviet repayment of political debts soon foundered on the hard rock of 
the Soviets’ patient and detailed negotiating style. Stalin had waited more than 
four years to get an economic and political settlement to his liking, and he still 
held the better cards. If the Germans wanted increasingly scarce Soviet resources, 
they were going to have to pay dearly for them. Stalin was not going to give them 
away just because he had gotten the better part of the territorial division resulting 
from this “Fourth Partition of Poland.” And until the Germans were thoroughly 
engaged with the Western powers, instead of just fighting the “phony war,” Stalin 
would remain reluctant to send raw materials to the Nazis that might easily be 
used against the USSR. But for the moment, he appeared willing to haggle. 
Negotiations cost him nothing. 

The German trade delegation arrived in Moscow on October 8 to begin 
discussing the new economic arrangement. From the outset a number of things 
went wrong for the Germans. First, the Soviet news agencies reported the arrival 
of only one chief economic negotiator, an “Ambassador Ritter von Schnurre.” 
Perhaps because the mistake fairly accurately described the “tag-team” 
negotiations that Schnurre and Ritter carried on with their counterpart Mikoyan, 
it took a long time to get the Soviet media to correct the error. 26 

More important, Mikoyan, State Secretary Krutikov, and People’s Commissar 
Tevossyan (with Molotov and Stalin intervening frequently) 27 refused to follow the 
German script for the negotiations (as Schnurre had feared). Although the Soviets 
appeared initially willing to meet many of the German requests, they rejected the 



80 Feeding the German Eagle 


overall German numbers. 28 They also declined to follow the German negotiating 
pattern and preferred instead to “carefully study among themselves section after 
section and then negotiate with us point by point.” Although Ritter found this 
process "rather tiresome,” he nonetheless argued, “By acceding to the other side’s 
working method of building the contractual structure piece by piece from the 
bottom up, we shall achieve speedier and better results than by the reverse method 
of working from the top down.” 29 

Despite these general problems, some aspects of the negotiations were 
showing progress as the Soviets agreed to a series of individual contracts. By the 
middle of October, a regular exchange of goods by rail lines through Poland had 
begun. 30 A potentially troublesome Anglo-Soviet economic arrangement was 
smoothed over when the Soviets promised to resell to Germany some of the tin and 
rubber they had gotten in exchange for lumber exports to England. 31 The Soviets 
also agreed to ship soybeans from Manchuria and not to renail the line to Rumania 
to meet the broader Soviet rail guage requirements. 32 In addition, the Soviets 
assented to a series of individual contracts, the most important of which were 
agreements to sell 900,000 tons of oil and 1 million tons of grain. 

Herwarth summarized for the Americans the general pattern of economic 
negotiations to this point: “A month ago German economic authorities appeared 
to be skeptical concerning the possibility of any immediate and substantial imports 
from Russia, but now it appears that they are beginning to believe that Russia will 
really make an effective effort to furnish raw materials to Germany.” 33 

These successes continued to pump air into German hopes that the Soviet 
Union would substantially aid the Nazi war economy. When the Soviets began 
inquiring into buying some German ships, the Naval High Command argued that 
“Russian economic help is of decisive importance for us. . . . Accordingly, 
generous reciprocation [is] required from the German side as well.” 34 Fritz 
Tschunke asserted in Die Ostwirtschaft that “in a short period we can reckon with 
a very large German-Soviet exchange of goods.” 35 The Reich Defense Council’s 
October 16 evaluation of the German food situation also emphasized the 
burgeoning connection to the USSR with its grain and its rail link to Manchuria. 36 
Even General Thomas seemed increasingly optimistic about the German raw- 
material situation, thanks in large part to the negotiations going on in Moscow. 37 

But major problems were soon looming on the horizon. Nervous about Soviet 
actions in the Baltics, Volksdeutsche began “flooding” across the borders. 
Dismayed, the Soviets started pressuring the Germans to stem the tide. 38 Despite 
Schnurre’s protests, the Soviets also began hedging on the new oil arrangements, 
with 200,000 of the scheduled 900,000 tons being merely diverted from Italy to the 
Reich. 39 In essence, they were robbing Peter to pay Paul. 

Even worse were the complicated developments in the grain negotiations. 
Before October 18, the Soviets had promised to deliver the 1 million tons of grain 
within one to two months. 40 But by October 21, the Soviets were now promising 
only to deliver 200,000 tons a month. 41 On October 22, even that promise was put 
on hold indefinitely by Mikoyan. Unfortunately, the lead grain negotiator, a Herr 



The German Plan 81 


Dassler, apparently had already rushed to the press with the news of a successful 
treaty. 42 Dassler, however, later claimed he had never authorized nor even known 
about the press report. 43 A treaty for 1 million tons was apparently signed on 
October 26, but at only 150,000 tons a month. 44 Even these shipments had yet to 
begin in December, and later documents have the October 26 treaty being scaled 
back to a mere 170,000 tons total. 45 A new grain treaty would have to wait until 
after the February agreements. 

The turning point for all- of these early endeavors came on October 22. The 
already slow economic negotiations came almost to full stop when Mikoyan 
explained that all the specific delivery contracts could not be carried out until the 
Germans had agreed to fulfill Soviet import wishes. According to Mikoyan’s oral 
account, these demands included large increases in war materials, 378 million RM 
in assorted machines and ships, chemical processes, and synthetic fuel plants. A 
trade commission led by Ivan Tevossyan would soon depart for Berlin to tour 
German production facilities for a couple of weeks. Final terms could be reached 
back in Moscow shortly thereafter. 46 

RITTER RETURNS, OCTOBER 26 

Mikoyan’s bombshell meant the end of any German hopes for a rapid 
resolution to the talks. But the negotiators had apparently concluded even earlier 
that final agreement was still some time off because of the languid Soviet 
negotiating style. By October 20, for example, Ribbentrop had agreed to Ritter’s 
October 18 request to return to Berlin to report on the state of the negotiations and 
help prepare for the soon-to-arrive Soviet trade mission. 47 So a few days later, 
Ritter and a number of other delegates left the Moscow negotiations in Schnurre’s 
capable hands and headed home. 48 

In the meantime, German military and economic officials had begun 
analyzing the tentative Soviet wishlist and preparing the way for the Soviet 
delegation. Concerns were quickly raised about the estimated seventy thousand 
tons a month of iron and steel that would be required to construct the items the 
Soviets wanted. 49 Ritter noted on October 25 that this difficult issue would have 
to be referred to the Ftihrer. 50 Some in the WiRuAmt also believed that the Soviets 
should turn over a sizeable percentage of their captured Polish locomotives and 
freightcars. 51 In addition, the size of the proposed Soviet mission, forty-five 
members coming over in the first wave and sixteen later, initially unnerved the 
Germans. 52 

But on the whole, despite the fact that Mikoyan’s demands were substantially 
above what the Germans had offered earlier, the German military officials saw “no 
insurmountable difficulties” in fulfilling the proposed Soviet terms. 53 By October 
26, Ritter reported “complete understanding for the fact that we must now make 
a great effort with regard to the German deliveries.” Although Hitler’s assent 
would be required for final approval, Ritter also felt confident that “from the 
military standpoint the deliveries of arms would probably not encounter any 



82 Feeding the German Eagle 


difficulties.” 54 In general, therefore, the Germans still hoped that they could 
accommodate the Soviet requests and reach a final treaty within the three weeks 
that Mikoyan had hinted at. 

As usual, however, new problems had already begun to appear even before the 
first Soviet delegate had stepped onto the tarmac. At the last minute, Mikoyan 
informed Schnurre that the Soviet mission would have no authority to make actual 
commitments. That meant that the economic negotiations might be substantially 
delayed while the military mission finished all its work and returned to Moscow. 
In frustration, Schnurre suggested to the Foreign Ministry that the main 
negotiations be moved back to Berlin. 55 From the German perspective, this was not 
an auspicious beginning to what they hoped would be the final stage of the new 
treaty talks. 


NOTES 

1. General Franz Haider, War Diary, 1939-42 , eds. C. Burdick and H. A. Jacobson 
(Novato, CA: Presidio, 1988), 66-67. 

2. BAMA/OKWAViRuAmt/Stb, “Interne Monatsbericht zur deutschen 
Rustungswirtschaft (Okt. 1939),” RW19/204 , 36. 

3. “Die Rufilandhandel der baltischen Staaten,” Die Ostwirtschaft, Oct/Nov 1939, 

139. 

4. PA/Schnurre/IG/VoWi, “Die Edelmetalle in der Sowjetunion (2.10.39),” R 
105314, 1-2. 

5. PA/HaPol/Schnurre, “Das Russische Verkehrsproblem (30.9.39),” R 105314, 
1-12. See also BAAP, 80IG 1/A 3725, 1-15. 

6. PA/HaPol/Schnurre/Wi, “Das Verkehrswesen der UdSSR ftlr 
Rohstoffiieferungen an das Deutsche Reich und filr den Transitverkehr aus anderen 
Landem (6.10.39),” R 105314, D527936M3. This report came to almost the same 
conclusions that the I. G. Farben study had—the Soviet system could handle the required 
increases in western Russia and the Ukraine, but could not handle any additional traffic to 
the Far East. 

7. BAMA, RW 19/243, 28-33, and BAMA, RW 19/335, 88. 

8. MA/Presseausschnitt, “Bericht Groote (30.9.39),” M 35.025. 

9. Perrey, 302-3. 

10. BA, R 43/11/1489a, 163. 

11. DGFP, D, 8:213, doc. 195. 

12. Philbin, 117. 

13. PA, R 106231, E041493. 

14. DGFP, D, 8: 265, doc. 237, n. 4. 

15. PA, R 106230, E041490. 

16. The German list included 330 million RM in industrial goods, a 150millionRM 
hydrogenation plant, 50 million RM in tubing and hard coal, 180 million RM in liquidated 
1935 credits, 30 million RM in gold, 50 million RM in armaments, and 20 million RM in 
Czech bonds. 

17. DGFP, D, 8: 233-34, doc. 208. 

18. NSR, 120. 

19. BAMA, RW 45/13b, 22a. 



The German Plan 83 


20. Eichler, 91. 

21. Muller, Wirtschaftsallianz, 102. 

22. Hitler, on the other hand, apparently expected no political “debt of gratitude” 
from the USSR, which made him all the more eager to attack the West quickly (Liddell- 
Hart, Second World War , 34, and Noakes & Pridham, 2: 760). 

23. See Weinberg, Germany and the Soviet Union, 62, for a discussion of the peace 
offensive and Stalin’s role in it. 

24. According to PA/Ritter, “Moskau (17.10.39),” R 27804, 357054, this total had 
increased to thirty-seven by mid-month. 

25. DGFP, D, 8: 263, doc. 237, n. 1. 

26. PA/Schnurre, Leben, 96. 

27. PA/Schnurre, Leben, 99. 

28. DGFP, D, 8: 263, doc. 237. 

29. DGFP, D, 8: 312, doc. 272. 

30. BAMA/OKW/WFSt, “Abschrift: Chef des Transportwesens,” RW 4/v.328, 1. 

31. NC&A, 6: 979, and DGFP, D, 7: 314, doc. 273, n. 2. 

32. DGFP, D, 8: 265, doc. 237. 

33. FRUS, 1939, 1: 488. 

34. NC&A, 6: 979. For the complete text, see BAMA/Skl, “Kriegstagebuch. Abt. C 
Vni: Volkerrechtliche Kriegfuhrung, Propaganda und Politik,” RM 7/198, 83-86. 

35. Fritz Tschunke, “Grofle deutsch-sowjetrussische Wirtschaftsplanung,” Die 
Ostwirtschaft, Oct/Nov 1939, 126. 

36. “Niederschrift ilber die Sitzung des Ministerrats fur die Reichsverteidigung 
(16.10.39),” Trial of the Major War Criminals (Nuremburg: IMT, 1947-49), 31: 233. 

37. BAMA/OKW/WiRtiAmt/Stb, “Anlagen zum Kriegstagebuch,” RW 19/171, 39. 
For the WiRuAmt's continuing discussions on German-Soviet trade, especially on the transit 
trade to the far east, see BAMA, RW 19/171, 23, and BAMA, RW 19/243, 47-48. 

38. BAMA/OKWAViRilAmt/Wi, “Kriegstagebuch,” RW 19/230, 12. 

39. PA, R 106231, 452718. 

40. DGFP, D, 8: 311, doc. 272. 

41. PA, R /0523/, E041543. 

42. PA/Schnurre, Leben, 98. 

43. BA/RfEuL/RfG, “Besprechung im Reichsemahrungsministerium (5.12.39),” R 
15/VII/46. 

44. BA/RfEuL/RfF, “Russland 1939-1941 (26.10.39),” R 15/V/43. 

45. Appendix A, Table 5.3. 

46. PA,R 106231, 452728-29. Mikoyan submitted a slightly more extensive written 
list the next day. 

47. PA, R 106231, E041542. 

48. FRUS, 1939, 1: 491. 

49. BAMA, RW 19/172, 62-63. 

50. BAMA, RW 19/243, 58. 

51. BAMA, RW 19/243, 54. 

52. DGFP, D, 8: 346, doc. 303. 

53. BAMA, RW 19/243, 61. 

54. DGFP, D, 8: 345, doc. 303. 

55. DGFP, D, 8: 346, doc. 303, n. 2. 



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Chapter 7 


The Soviet Plan 


Unfortunately for the Germans, the negotiating situation went from bad to worse 
in November. While the middle two weeks of October had seen the negotiators 
hustle through the details of the German plan for a new economic treaty, the next 
two months would find the two parties laboring over the Soviet proposals. This 
disparity in the amount of time devoted to each side’s plan is yet another 
indication that it was still the Soviets who held the upper hand. Despite continuing 
German demands for speed, the Soviets maintained their languid pace. Despite the 
German rationale that industrial goods took longer to produce and should 
therefore follow Soviet shipments of raw materials, Stalin switched the order and 
required larger shipments of German machines and weapons during the first year. 
Finally, despite German claims that the USSR owed Germany for its easy 
territorial gains in Eastern Europe, the Soviets asserted that their economic and 
military aid had made the Wehrmacht’s victories possible and that Germany was 
actually in debt to the USSR. 1 Now it was payback time. 


MEN IN SUITS, NOVEMBER 7 

An almost bizarre game of hide-and-seek developed from the very outset. The 
forty-five-member Soviet delegation arrived in Berlin on October 26, all newly 
outfitted in the same mid-quality dark brown coats, bright yellow shoes, drab hats, 
and empty suitcases. The suitcases were to bring back all those wonderful German 
consumer goods that the Soviet utopia had somehow failed to produce. One fellow 
had apparently started his shopping immediately upon arrival and now stood out 
from the other delegates because he was wearing a sailor’s cap. Almost all the 
members of the mission could speak German relatively well, though few would 



86 Feeding the German Eagle 


admit to their language abilities at first. The Germans, in turn, tried to gauge their 
opponents’ level of understanding by providing only partial translations and 
observing who whispered the full version to his comrades. 2 

More important, five of the eight working groups in the Soviet mission dealt 
with armaments and the other three with high-technology manufacturing 
equipment. 3 The initial Soviet wishlist revealed on October 27 made it even clearer 
that the Soviets were after German technology, and lots of it. In addition to the 
industrial goods that Mikoyan had mentioned, the Soviets added a huge list of 
potential military supplies. Naval equipment predominated, including four light 
cruisers and plans for all the latest German capital ships. 4 

Why all this emphasis on building a powerful battlefleet with German help? 
According to Admiral Kuznetsov, Stalin was acting on his own initiative without 
much input from his naval officers. 5 In short, there was little military rationale for 
these acquisitions. The naval list, therefore, was probably “the result of Stalin’s 
objective to learn as much as possible about his future enemy and, if possible, to 
hobble its expansion.” 6 

Along these same lines, the Soviet delegates also produced inspection tour 
requests for up to four weeks. 7 At each stop the distrustful delegates read off a 
series of questions while peering around corners and badgering their guides about 
not being shown the latest equipment. 8 Alexander Yakovlev, Deputy Commissar 
for the Soviet Aircraft Industry, offers one account of the resulting clashes that 
occurred as the Soviets toured the country: 

Everything was impeccably organized and made a rather good impression. Apparently, it 
was not the first time that such a display had been organized. 

We returned to the “Adlon” strongly impressed by what we had seen. Our General 
Gusev, however, was beset by doubts: how could the Germans show us the true state of 
their air force equipment? “They probably think us fools and are displaying obsolete, rather 
than current, airplanes,” he said. 

. . . Our trip around the plants did much to disperse our doubts. The assembly line of 
aircraft and aircraft engines, the type of machinery in the shops, rather convincingly 
confirmed that what we had seen at Johannistal was indeed the backbone of the Luftwaffe. 
All our engineers clearly understood this, but our generals stubbornly held to the opposite. 

When the Soviet generals voiced these suspicions to their liaison, General Udet, 
he exploded: “I give you my word as an officer. We’ve shown you everything; if 
you don’t like what you saw, don’t buy.” 9 

Udet’s reaction was typical for the Germans involved in these economic 
negotiations. They realized that “Russian aid is of decisive importance for us,” 10 
and that they therefore needed to cooperate fully. But they also felt that the current 
terms (and current Soviet attitudes) were somewhat extreme and needed 
modification. Even before the new Soviet proposals had been unveiled, for 
example, the Germans were already considering halting production on some of 
their own synthetic fuel plants in order to accommodate Soviet orders. But the 



The Soviet Plan 87 


German economic officials were still reluctant to limit current plant construction, 
such as the project at Wesseling, unless they absolutely had to. 11 

After the Soviet mission arrived and issued its initial demands, the Germans 
remained cordial but increasingly concerned. The WiRuAmt thought it could just 
barely supply the metals needed to produce the items the Soviets wanted, but was 
doubtful that the Soviet machinery demands could be met. 12 For his part. Hitler 
ordered that Soviet inspection wishes be fulfilled except when it came to top-secret 
information. 13 Ritter believed he had convinced the German government to go 
along with the Soviet plans, but he also thought the Soviets would continue to drag 
their feet with their fact-finding and sight-seeing trips. 14 

As the days went by, the Germans became even more pessimistic. 
Weizsacker’s November 1 memorandum noted that “Field Marshal Goring, Grand 
Admiral Raeder and Colonel General Keitel, independently of each other, have 
told me that the Russian delegation in Berlin expected too much in the way of 
inspection and procurement of German materials of war.” 15 And a November 8 
meeting in the WiRuAmt found German officials who only two weeks earlier had 
been fairly optimistic now concluding that the transportation system could not 
handle the envisioned trade totals and that the German war economy could not 
afford to give up the seventy thousand tons of iron a month required by the 
Soviets. 16 

Back in Moscow problems also continued to mount. On October 26, for 
example, the Germans complained that the Soviets had improperly taken 5 million 
RM worth of platinum netting in Poland. 17 The delays in establishing transit 
connections had also eroded German trade with countries such as Iran. 18 Rising 
German frustrations even boiled over into personal squabbling. A Lieutenant- 
Colonel Doerr, for instance, challenged Schnurre’s handling of the Rumanian rail 
discussions. Schnurre retaliated by demanding Doerr’s recall. 19 At the same time, 
German businessmen continued to stream to Moscow determined to run their own 
negotiations. By the end of October, Schnurre was forced to suspend further 
business applications for a week while the Russia Committee sorted out the 
increasingly confusing situation. 20 

Schnurre was obviously feeling the pressure. On October 26 he asked for full 
authority to negotiate and sign an economic agreement. 21 When Berlin denied his 
request and the Soviets continued to delay the talks in Moscow. Schnurre asked 
to return to Berlin. 22 

Despite these growing difficulties, there were still some positive developments 
in German-Soviet relations. The Soviets moved closer to the German position on 
third-party buying of various metals, though still under the conditions that the 
transactions be properly camouflaged and that the Soviets receive repayment from 
Germany mostly in hard currency. 23 The Soviets also agreed to reduce the freight 
costs for shipping soybeans from Manchuria by 50 percent for one year. 24 
Molotov’s October 31 speech in particular seemed to bode well when he asserted, 
“The recent economic negotiations carried on by the German delegation in 
Moscow and the present negotiations being carried on by the Soviet economic 



88 Feeding the German Eagle 


delegation in Germany are preparing a broad basis for the development of trade 
between the Soviet Union and Germany.” 25 The two sides also hammered out an 
agreement on the exchange of populations in the newly divided territories. 26 

But the increasing problems seemed to outweigh these limited advances. By 
November 3, Ritter was sending frantic messages that the Rumanian and Trans- 
Siberian rail agreements had to be signed immediately. 27 On November 7, 
Tevossyan and Goring met to smooth over some of these problems, but the 
encounter devolved into another round of Soviet accusations of deception and 
German assertions of openness. 28 

While some historians have seen these high Soviet armaments and inspection 
demands and the resulting tension as part of a Soviet “blackmail” agenda and 
others have argued that this was primarily just a reaction to German “blackmail,” 
it seems more likely that the Soviets were using their superior bargaining position 
to get the best economic terms they could and to do a little economic espionage 
along the way. What transformed the otherwise merely difficult negotiations, as 
had been occurring in Moscow, into the intense confrontations described by 
Yakovlev were some fundamental misperceptions by both sides about their 
opponent’s level of technological sophistication. The Germans apparently assumed 
from their encounters with the poorly equipped Russians in Poland that they could 
intimidate the Soviets, as they had done with other countries, by a display of their 
military prowess. So they showed the Soviets almost eveiything and expected them 
to be impressed. 29 For their part, the Soviets assumed that the Germans would be 
much more technologically advanced than themselves and therefore complained 
bitterly when shown items inferior to what they already had in development. 
According to Guderian, the Germans noted this anomaly but did not fully 
understand its cause until 1941 when they ran into T-34s on the Russian steppes. 30 
By then, it was too late. 

THE SOVIET OFFER, NOVEMBER 30 

The basic pattern of the first week of November continued during the rest of 
the month. The Soviets toured the country, delayed the negotiations, and 
increased their demands. The Germans pressed for speedy resolution and 
complained about Soviet tactics but did reach some limited agreements. In general, 
however, there was little the Germans could do to alter the Soviet tempo or terms. 

What successes there were continued to come in Moscow where “trade 
negotiations with Russia have so far been more successful than anticipated by the 
German authorities.” 31 Although still at the stage of vague promises, the Soviets 
did appear increasingly willing to make concessions on a series of secondary 
issues. By November 10, for example, Otto Wolff and GHH seemed on the verge 
of a compromise that would complete the synthetic fuel plant agreement. 32 That 
same day, in a meeting with Schulenburg, Molotov offered to accept payment for 
transit costs through clearing accounts instead of in hard currency if the Germans 
would first agree to the Soviet mission’s demands. Molotov also stated that the 



The Soviet Plan 89 


Soviets would send several million tons of 35 to 40 percent iron ore. Most 
enticingly, he promised to begin shipments of grain and oil immediately. 33 
Furthermore, on November 17, the Soviets decided to return the platinum netting 
the Germans had earlier requested and desperately needed. 34 By November 20, the 
Soviets had agreed to ship 200,000 tons of liquid fuels before the end of January. 35 
And by November 21, Ter-Nedden was reporting agreement on transit and 
delivery terms for almost all of the raw materials that Germany had wanted, 
including 1.2 million tons a year to and 300,000 tons a year from the Far East. 36 

But the Moscow negotiations also saw their share of difficulties, particularly 
in regards to transportation. By November 9, the Soviets admitted what the 
Germans had already feared, that the USSR lacked the necessary train cars to 
handle the required connections at the Polish border. Consequently, Molotov 
informed a dismayed Schulenburg that all shipments would now have to reload at 
a series of special stations on the new borders. 37 

Further problems arose concerning the Rumanian oil connection. According 
to the Ministry of Economics, the Germans needed at least 100,000 tons of oil a 
month from Rumania, but shipments had already declined to 60,000 tons in 
November. 38 The Allies certainly realized the crucial nature of Rumanian oil and 
even tried to repeat their World War I success of paying the Rumanians to destroy 
their own oil fields. The two sides could never agree on a price, however, and it 
would be left to Allied bombers to demolish the fields later in the war. 39 

For its part, the USSR promised to restart train shipments along the 
Rumanian route by November 15. 40 But the Soviets decided instead to start 
renailing the tracks, 41 slowing down the already contracting vital oil shipments. 42 
After official protests by Hitler himself, 43 the Soviets set December 1 as the new 
date for the now renailed and broadened line to reopen 44 under the condition that 
the Germans accept the Russian plan for reloading stations on the Polish border. 45 

With oil becoming increasingly scarce, the German government redoubled its 
efforts to ensure exports from the USSR. It first decided to set up yet another 
agency, this one charged with supervising oil import agreements and deliveries. 
After an organizational meeting on November 10, 46 Mineralol-Einfuhr GmbH was 
founded on November 15 as a consortium of the major businesses and government 
agencies involved in oil production and supplies. 47 In addition to the new agency, 
new studies on the Soviet oil system continued to appear, reinforcing the previous 
conclusions that the Soviets had vast reserves but limited potential to increase 
production or transport oil abroad (except, perhaps, via the Black Sea). 48 

Although some progress had obviously been made in Moscow, these 
agreements and concessions were still contingent on the results of the talks in 
Berlin, that is, on the Germans first accepting Soviet delivery demands. 49 That, of 
course, was not going to occur until after the Soviet mission had finished its 
painstakingly slow work. As the Soviets continued their inspection tours, they 
repeated their complaints that the Germans were not showing them everything 
they had asked to see. In a November 14 meeting with Ritter, Tevossyan 
threatened that without full access the Soviets would not be able to place their 



90 Feeding the German Eagle 


orders, and without these orders no raw materials would be sent to Germany. 50 

There were some positive developments in Germany, however. Admiral 
Raeder, for one, seemed relatively satisfied with his negotiations with the 
Soviets, 51 though Soviet support for various projects such as Basis Nord and the 
purchase of Soviet submarines 52 probably influenced his attitude. Similarly, “the 
impressions of the Russian delegation in nonmilitary fields were altogether 
satisfactory.” 53 Another treaty on exchange of populations was even signed on 
November 16. 54 And by November 18, the Soviets finally did offer a second set of 
economic proposals. 55 The demands still lacked specifics, but at least this was 
progress. After a formal dinner hosted by Ambassador Ritter at the Kaiserhof 
Hotel for all involved with the economic negotiations, 55 Tevossyan and 
Savtschenko flew back to Moscow on November 18 to consult on the final Soviet 
terms, ostensibly to return in a couple of days but actually not to reappear in Berlin 
until the end of the month. 57 

In the meantime, the game continued. The Germans pressed again and again 
for more speed 58 but they now assumed that the final treaty might not be signed 
until the second half of December. 59 Even this assessment had to be revised when 
Tevossyan and Savtschenko finally returned and submitted a forty-eight-page, 
single-spaced list of detailed demands on November 30. 60 Instead of the 58 million 
RM in military goods and the up-front shipment of Russian raw materials called 
for in the September 28 treaty, the Soviets now wanted an impossible 1.5 billion 
RM in total deliveries by the end of 1940, 700 million RM worth from the navy 
alone, not counting extensive development costs. 61 From ships to aircraft to 
synthetic fuel plants, the Soviets wanted the best Germany had to offer at rock- 
bottom prices, and they wanted it all right away! 62 The Germans were stunned. 


THE DELEGATES DEPART, DECEMBER 13 

On the same day that the Soviets dropped this economic bombshell, however, 
they also set off a major political firestorm by invading Finland. A crisis had been 
simmering since the spring, but the treaties with Germany gave Stalin the 
opportunity to deal with the stubborn Finns, who had refused to accept his 
territorial arrangements. The Soviets expected an easy victory, with the Finnish 
working class rising up to support the invaders. 63 So confident of victory were the 
Red Army leaders that Soviet troops were even issued warnings not to violate 
Swedish neutrality! 64 What Stalin got instead was a bloodbath. As one Soviet 
general explained, “We have conquered just enough Finnish territory to allow us 
to bury our dead.” 65 

For the Germans, the Finnish crisis presented a major problem. With Italy 66 
and other fascist countries wanting to aid tiny Finland against the Bolshevik 
menace. Hitler had to make an early and firm decision to remain benevolently 
neutral toward the Soviet cause if he was to avoid being sucked into the 
maelstrom. 67 Finland had been clearly relegated to the Soviet sphere in the Nazi- 
Soviet Pact, and the Germans still needed Soviet economic aid too much in order 



The Soviet Plan 91 


to side against their “comrades” to the east. So the Germans played their role as 
neutral spectator and occasional supporter of the Soviet cause throughout the 
conflict. 68 As Weizsacker directed all German missions, “In your conversations 
regarding the Finnish-Russian conflict please avoid any anti-Russian note.” 69 

Although this political crisis would eventually alter the framework within 
which the economic relationship would operate, for the moment the economic 
negotiations continued their downward spiral. The Germans scrambled frantically 
for answers to the Soviet demands. The WiRuAmt held yet another round of 
meetings during the first two weeks of December to discuss the Soviet 
connection. 70 Schnurre noted on December 2 that turrets and other major items 
would take three to four years to construct and could not possibly be supplied by 
the end of 1940. Schnurre also pointed out that the Germans lacked the necessary 
raw materials to produce much of this equipment and that the Soviets would 
therefore have to supply these resources up front before construction could begin. 71 
Military leaders meeting on December 4 reiterated Schnurre’s arguments even 
more vociferously, pointing to earlier Fiihrer statements that Soviet trade should 
not come at the expense of current military programs. The Germans also began 
calculating prices for what items they could send on the basis of world prices in 
August plus 20 percent plus licensing fees. 72 Considering that the Soviets had been 
asking for world prices plus 50 percent at the start of their negotiations, this 
scheme was not unreasonable, but it was still a rebuff to the Russians. 

In the meantime, there were a few positive signs. Soviet oil shipments 
previously agreed to were now scheduled to begin on December 14. 73 Basis Nord 
was also finally operational by December 9, though the still-suspicious Soviets 
“made Basis Nord very difficult to use-at least until they decided that the Germans 
were going to win the Norwegian campaign,” at which point the base became 
superfluous. 74 A number of delivery agreements were concluded, including one for 
100,000 tons of cotton, the signing of which the German negotiator called “the 
most beautiful experience of his life.” 75 And the treaty governing general terms of 
trade and arbitration proceedings between the two countries was redone on 
December 12. 76 

But these successes made only the smallest of cracks in the looming Soviet 
wall. On the grounds that it did not possess the necessary rolling stock, the USSR 
continued to push for reloading stations on the Polish border. When the Germans 
pressed about the 60,000 or more freight cars captured by the Soviets from the 
Poles, the USSR suddenly claimed that it had found only 6,0007’ The Soviets also 
delayed yet again on reopening the Rumanian rail connection. 78 Then the Soviets 
tried to scale back their 50 percent reduction on Manchurian soybeans to 25 
percent. 79 Repeated wrangles also developed on the new Polish border as both sides 
tried to expel their Jews into the other’s territory. 80 Finally, the Soviets handed 
over a revised set of military demands, which continued their earlier high requests 
and elicited this rebuke from Ribbentrop to Soviet Ambassador Skvartsev: “I 
wanted to say beforehand that I had given instructions to comply with the Russian 
requests in any conceivable way, within the limits of possibility. But it should not 



92 Feeding the German Eagle 


be forgotten that Germany is at war and that certain things are simply not 
possible.” 81 

Some in the military decided the whole effort was futile. Keitel telephoned 
Weizsacker on December 5, for example, to complain that “the Russian schedule 
of requests for deliveries of German products was growing more and more 
voluminous and unreasonable.” 82 During a December 6 meeting, the military 
stubbornly refused Ritter’s request to release iron or other metals for Soviet export 
items. 83 An increasingly frustrated Ritter met with Goring on December 14 to get 
the seventy thousand tons a month of iron reinstated, again to no avail. In fact, a 
few generals now began to argue that Ritter and Schnurre were giving away too 
much in the negotiations and that the talks with the Soviets should be dropped. 84 

Despite these various military and diplomatic discussions, the questions raised 
were obviously too important for “mere mortals,” and so first Hitler and then 
Stalin were brought in to resolve the growing crisis. By December 2, Ritter had 
already reserved a series of issues for the Fiihrer’s decision: the 70,000 tons a 
month of iron needed to produce the Soviet goods, the cruiser Seydlitz, plans for 
the battleship Bismarck, torpedoes and mines with the most up-to-date fuses, and 
a demonstration of a 24-cm cannon. Ritter also noted that further negotiations 
with the Soviet trade delegation and with Mikoyan would probably not reach any 
decisive conclusion and that Molotov or maybe even Stalin might have to be 
brought into the process. 85 Schnurre added the questions of delivering the cruiser 
Prinz Eugen and models of Germany’s most advanced planes to the list of issues 
reserved for Hitler. 86 

Over the next couple of weeks. Hitler apparently sorted out what additional 
deliveries he was willing to make to the Soviets. By December 8, for example, he 
ruled out completely the Seydlitz and the Prinz Eugen, temporarily the 20-cm guns 
for the Liitzow, and perhaps also the plans for the Bismarck* 1 Hitler did finally 
acquiesce a week later to selling the Bismarck plans, but only reluctantly. 88 By 
December 9, the various lists of questions had been consolidated into the following 
still outstanding issues: Bismarck plans, Liitzow hull, armor plating, turrets, 
electric torpedoes for subs, plane models, army material, machine tools, and 
industrial items. 89 The Germans did agree to increase their military deliveries to 
660 million RM from the September 28 treaty figure of 58 million RM, 90 but Hitler 
still delayed making a final decision on some of these other questions. 

Two weeks into December, German plans for an October agreement were now 
just a distant memory, lost in the constant Soviet haggling and delays. 
Nevertheless, with the negotiations heading back to Moscow, Ritter declared “that 
the signing of the agreement can still take place before Christmas.” 91 Having 
completed “their six weeks of economic espionage,” having stuffed their suitcases 
with German goods, and having eaten their fill of German food one last time at the 
Kaiserhof Hotel, 92 the returning Soviet delegates reported that they had been very 
satisfied with their visit, and Mikoyan told Schnurre that he was very optimistic 
about the upcoming talks. 93 Despite these mutual statements of good will, however, 
neither side would finish its Christmas shopping on time. 



The Soviet Plan 93 


NOTES 

1. BAMA, RM 7/198, 287. 

2. PA/DR, “UdSSR 1939-1941 ” R 27168, 6: 25884-85. 

3. See PA, R 106231, E041565, for a detailed list of the Soviet delegates and 
which German officials were responsible for handling each group in the delegation. 

4. See PA, R 106231, 452734-37, for details of the new Soviet plan. 

5. See Seweryn Bialer, ed., Stalin and His Generals: Soviet Military Memoirs of 
World War 11 (Boulder: Westview, 1984), 173-75. 

6. Philbin, 69. 

7. Birkenfeld, Wirtschaftspartner, 487-88. 

8. PA, R 27168, 25885-90. 

9. Bialer, 117-18. 

10. BAMA, RM 7/198, 288. 

11. BAMA/OKW/WiRiiAmt/Ro, “Innerdeutsche Verwertung von bisher fur 
Hydrierwerk Wesseling bestellten Apparaten,” RW 19/2862, 560-62 & 567-69. In 
December, the project was still “on hold,” and the Germans were becoming increasingly 
insistent on a final decision (BAMA, RW 19/2862, 576-79). It never came. 

12. BAMA, RW 19/335, 136-37. 

13. BAMA, RW 19/243, 70. 

14. DGFP, D, 7: 361-62, doc. 316. 

15. NSR, 127. 

16. BAMA, RW 19/172, 39-40. 

17. PA, R 106231, E041555. 

18. DGFP, D, 8: 353-57, doc. 312. 

19. PA, R 106231, E041553 & E041563. 

20. PA, R 106231, 452740. See also N. Peresselenkow, “Die derzeitigen 
Moglichkeiten und Grenzen des Exportgeschafts nach der UdSSR,” Die Ostwirtschaft, 
Oct/Nov 1939, 127-29, and a notice from the Russia Committee on pages 130-31 in the 
same issue. 

21. PA, R 106231, E041554. 

22. PA, R 106231, E041568. 

23. PA, R 106231, 452741 & 452745-47. See also DGFP, D, 8: 358, doc. 314, and 
368-69, doc. 320. 

24. PA, R 106231, E041566 & E041574. Earlier talks about establishing margarine 
factories in Manchuria to cut down on transport fees became mute as a result (DGFP, D, 
8: 264, doc. 237, n. 3). 

25. As quoted in Degras, Soviet Documents, 3: 388^400. 

26. For more information, see Margaret Carlyle, ed.. Documents on International 
Affairs, 1939-1946 (London: Oxford University, 1954), 2: 59. The Germans later came to 
regret some unintended results of this nationalistic policy of gathering the Baltic 
Volksdeutsche into the Reich. These people had been the Germans’ primary business 
contacts in the region, and their departure threatened to undermine much of the German 
trade in the area (BA, R 9/1/635, 2: 221-54). 

27. PA, R 106231, E041578. 

28. DGFP, D, 8: 386-87, doc. 335. 

29. Olaf Groehler, Selbstmorderische Allianz. Deutsch-russische 
Militdrbeziehungen 1920-1941 (Berlin: Vision, 1992), 167. 

30. As cited in Clark, 26. 



94 Feeding the German Eagle 


31. FRUS, 1939, 1: 496. This report also noted, however, that “the Reich has no 
reliable indications or assurances that expansion of trade with Germany has been adopted 
by the Soviet Government as a permanent policy.” 

32. RWW/Otto WolffiRuflland, “Gasper Letter (10.11.39),” 72-41-5. A final 
settlement was delayed, however, because the Soviets demanded delivery within twenty- 
two months instead of the usual thirty, and the Germans decided they did not have 
sufficient cobalt to produce the vital contact components (BAMA, RW19/2862, 570-74). 

33. DGFP, D, 8: 394, doc. 342. 

34. PA, R 106231, E041599. By December 6, the WiRuAmt was reporting that 
Germany would run out of platinum by March without supplies from the Soviets (BAMA, 
RW 19/335, 233). Although gold or silver could be substituted for platinum in various 
chemical processes, these items were also increasingly scarce and less efficient. 

35. BAMA, RW 19/335, 207. 

36. BAMA, RW 19/243, 92. 

37. PA, R 106231, E041585. 

38. DGFP, D, 8: 467, doc. 402. 

39. Yergin, 370. 

40. PA, R 27804, 356952-53. 

41. PA, R 106231, E041601. 

42. PA, R 106231, E041610. 

43. DGFP, D, 8: 447-^48, doc. 386. 

44. PA, R 106231, E041612. 

45. DGFP, D, 8:447^18, doc. 386. Interestingly, the German oil agencies thought 
the renailing might actually facilitate Soviet oil shipments (even as it hindered transport 
from Rumania), because the transfer stations and freight cars would now be located on 
German soil instead of in Rumania. 

46. BAMA, RW 19/335, 174. 

47. For more information on the founding and structure of this organization, see 
BA/RFM, “Abschrift vom RWM (6.12.39),” R 2/17315, and BAMA/OKW/WiRtiAmt/Ro, 
“Mineralol-Einfuhr aus Russland ,” RW 19/2814, J005913 & J005918-19. 

48. PA/HaPol/Schnurre/Forschungsstelle fur Wehrwirtschall/Dr. Berkenkopf, “Die 
Sowjetunion als deutschen Erdollieferent,” R 105314, D527949-87. 

49. PA, R E041607. 

50. PA, R 27804, 356911-21. 

51. FCNA, 56. 

52. Although Hitler rejected buying Soviet submarines on October 10 because of 
quality concerns and because it would show German naval weakness, Raeder kept coming 
back to the idea, and Hitler had to deny the request again on November 10 ( NC&A , 6: 980) 
and November 22 {FCNA, 58). Even then, Ribbentrop continued to investigate the 
possibility via Schulenburg on November 30 {DGFP, D, 8: 468-69, doc. 403). 

53. DGFP, D, 8: 422, doc. 371. 

54. PA, R 106231, 452749-69. 

55. PA, R 106231, 452775-81. 

56. PA, R 27168, 25892. 

57. DGFP, D, 8: 422, doc. 371. 

58. DGFP, D, 8: 422, doc. 371. 

59. BAMA, RW 19/243, 92. 

60. PA, R 106231, 452785. 



The Soviet Plan 95 


61. DGFP, D, 8: 482, doc. 412. 

62. For a complete list of the Soviet demands, see DGFP, D, 8: 472-75, doc. 407. 

63. Pike, 280. 

64. McSherry, 2: 39^10. 

65. As quoted in Bullock, Hitler and Stalin, 660. 

66. Galeazo Ciano, The Ciano Diaries, 1939-1943, ed. Hugh Gibson (New York: 
Doubleday, 1946), 174. 

67. Read and Fisher, 408-9. 

68. Weinberg, Germany and the Soviet Union , 88-91. 

69. NSR, 127. 

70. BAMA, RW19/243, 112-13 & 119-22, and BAMA, RW19/164, 3. 

71. DGFP, D, 8: 482, doc. 412. A December 21 report listed the tons of material 
required each month to fulfill the naval contracts alone: iron—76,375, copper—2973, 
lead—3207, tin—413, nickel—917.5, aluminum—1674, chrome—1286, 
molybdenum—161, and rubber—548. See PA/Ritter, “Moskau Verhandlungen, Materielen 
zum deutsch-sowjetischen Wirtschaftsabkommen 12.39-1.40,” R 27805, la: 324553-54. 

72. BAMA, RW 19/173, 237-39. 

73. BAMA, RW 19/335, 239. 

74. Philbin, 113. 

75. PA/Schnurre, Leben, 98. 

76. N. Peresselenkow, “Zur Neufassung der Allgemeinen Lieferbedingungen und 
Schiedsgerichtsvereinbarung,”Die Ostwirtschaft, December 1939,158-62. Although the 
Russia Committee tried to sell this new treaty as beneficial to Germany, Karl Helmer 
argues that the tougher punishment clauses wound up actually favoring the Soviets 
(Helmer, 24). 

77. PA, R 27803, 357228. 

78. PA, R 106231, E041666. 

79. PA, R 106231, E041674. 

80. NSR, 128. 

81. DGFP, D, 8:513, doc. 438. 

82. NSR, 128. 

83. BAMA, RW 19/173, 230-32. 

84. PA, R 27803, 357199-200. Notice that Ritter’s pleading to a reluctant military 
is very different from his harsh assessment of the Soviet demands offered to Schulenburg 
(DGFP, D, 8: 516-18, doc. 442). 

85. DGFP, D, 8:483, doc. 413. 

86. DGFP, D, 8: 481-82, doc. 412. 

87. FCNA, 63. 

88. PA, R 27803, 357202, and DGFP , D, 8: 537, doc. 457. 

89. PA, R 27803, 3572218-20. 

90. DGFP, D, 8: 517, doc. 442. 

91. DGFP, D, 8: 518, doc. 442. 

92. PA, R 27168, 25893. 

93. PA, R 27803, 357203. 



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Chapter 8 


The Final Plan: Part I 


With both sides having offered their own plans for an economic arrangement, the 
time had finally come to work out the differences. The Germans again hoped for 
a quick signing. Instead, the next two months saw yet another replay of the now- 
familiar pattern as the Soviets delayed and haggled their way through a series of 
high-level summit meetings. The resulting tension almost scuttled the already 
tortuous talks on several occasions. But both sides still had too much to gain from 
closer economic cooperation, and a settlement was finally reached on February 11, 
1940, the terms of which bore little resemblance to the German interpretation of 
the vague Soviet promises in the September 28 treaty. 


FIRST MOSCOW ECONOMIC SUMMIT, DECEMBER 31 

The Germans had initially proposed 1.3 billion RM in raw material deliveries 
during 1940 in return for 810 million RM, only 330 million RM of which was in 
industrial and military goods. The Soviets had countered with roughly 500 million 
RM in raw materials in exchange for 1.5 billion RM, almost all of which was in 
industrial and military items. Having made their first offer primarily on the basis 
of “tactical considerations,” 1 the Germans were now willing to increase their 
military shipments from 58 million to 660 million RM in addition to over 300 
million in industrial equipment, much of this 1 billion RM total being sent in 
1940. But the Germans still would not, indeed could not, without endangering 
their war effort, move away from the September 28 framework of Soviet shipments 
preceding German counterdeliveries. 

Having already made major concessions from their first offer and from the 
September 28 treaty, the Germans now hoped that the Soviets would meet them 



98 Feeding the German Eagle 


halfway. What hopes the Germans still had for a quick signing in Moscow, 
however, were soon dashed on the hard rock of Anastas Mikoyan. During a 
December 15 discussion with Schulenburg, for example, the Trade Commissar 
rejected German complaints that Soviet demands were too high and leveled his 
own charges that German prices were exorbitant. 2 

The Americans, too, had caught the scent of trouble in the economic 
negotiations. According to Ambassador Kirk, “The impression prevails that a few 
weeks ago German authorities were sincerely convinced that Russia would furnish 
with reasonable promptness a fairly substantial volume of needed raw materials 
but that at the present moment these authorities are less sanguine as regards 
delivery dates and quantities of the commodities negotiated for.” 3 

By December 19, the “less sanguine” Ritter had become downright pessimistic 
after his first encounter with Mikoyan. The Soviet Trade Commissar “insisted that 
the German compensatory deliveries had to consist almost entirely of military 
deliveries” and further demanded “delivery of the entire list [as] the only 
satisfactory equivalent for the deliveries of raw materials, which under present 
conditions are not otherwise obtainable for Germany on the world market.” 4 The 
Soviet threat was explicit. They realized that the Germans needed this economic 
arrangement much more than they did. Ritter, understandably, rejected Mikoyan’s 
“all or nothing” approach, and with that the economic talks were temporarily 
suspended. 

An anxious Ribbentrop, seeing his grand edifice collapsing around him, 
blamed Mikoyan for the difficulties and assumed that the Trade Commissar’s 
position was not shared by Molotov or Stalin. 5 Schnurre’s encounter just a few 
days earlier illustrates how wrong Ribbentrop was: 

When they reached an impasse, Mikoyan said he could not decide what should be done, it 
was a matter for Molotov—at which point Molotov himself suddenly emerged from a 
curtained-off archway in Mikoyan’s office. After a short discussion, Molotov, in turn, said 
he could not decide, it was really a matter for Stalin—whereupon Stalin came out through 
the curtain and joined the discussion, pacing to and fro while considering the question, as 
was his habit, puffing on his pipe as he thought, then coming up with a decision which 
suited everybody. 6 

Despite its absurdity, Schulenburg did take Ribbentrop’s case to Molotov late 
on the twenty-second of December. Schulenburg began by playing the political 
card, explaining that these talks held more than just economic significance for 
Germany and that Molotov should therefore use his influence to clear away the 
remaining hurdles. Molotov replied that the September 28 treaty had used the 
euphemism of “industrial deliveries” to include military items “because the 
correspondence was to be published.” He did, however, allow that the Germans 
might not be able to supply everything the Soviets had asked for—one of the three 
cruisers requested would be sufficient, for example. After all, “he had the 
impression in the present case that both sides were guilty of exaggeration” in their 
initial proposals. 7 



The Final Plan: Part I 99 


In fact, Molotov complained, it was the German’s “exorbitant” prices that 
were the real cause of the difficulties. Schulenburg argued in turn that since the 
Soviets wanted “models” of planes and other equipment for testing, they should 
pay the usual licensing fees, to which Molotov responded that the Germans should 
then pay licensing fees for Soviet oil and grain production because of the money 
invested in these enterprises. 8 

Despite these very sharp exchanges, this talk had at least reopened the 
possibility of an economic settlement. However, as Ritter pointed out, Molotov’s 
contention that “industrial deliveries” also meant “military deliveries” 9 and his 
bizarre rendering of standard price structures and licensing agreements indicated 
that “even though [the conversations] make it possible to resume negotiations, we 
can hardly expect the negotiations to make smooth and rapid progress.” 10 

There were, on the other hand, some minor successes during these final two 
weeks of December. On the eighteenth, for example, the first Soviet grain 
shipments finally crossed the border at Przemysl (one of the main transfer points, 
especially for grain and oil), 11 and the Soviets were soon promising to ship 
100,000 tons of oil by the end of January. 12 Even better, the two sides hammered 
out agreements by December 23 regulating air and rail traffic 13 to replace the 
chaotic black hole into which entire carloads had occasionally disappeared during 
the past months. 14 Finally, on the thirty-first the clearing and payment agreements 
were extended for another year. 15 

Although most in Germany wanted the Russo-Finnish War resolved quickly 
in order to open up Baltic trade and to avoid Western intervention in the region, 16 
some felt that they might be able to follow the course Schulenburg had already 
hinted at during his December 22 conversation with Molotov and use the conflict 
to pressure the USSR in the economic negotiations. The Naval High Command, 
for example, “advocated playing German military strength to its maximum 
diplomatic effect.” 17 Hitler himself seems to have hoped that the USSR had “bitten 
off more than she can chew in Finland.” 18 

But the overall negotiations remained extremely difficult. The Soviets were 
apparently suspicious that Ribbentrop’ s effusive birthday wishes to Stalin were not 
shared by the Ftihrer or the military. 19 And as long as they felt that they held the 
upper hand, they were not going to give in quickly to the German requests. On 
December 25, for example, perhaps as some sort of Christmas present to 
themselves, the Soviets issued yet another revised list of demands, this one 
running 130 pages. 20 On December 27, Ritter concluded, “Negotiations here are 
not proceeding favorably. Both in general and in detail the other side is not 
showing the generosity that should result from the new political situation. Instead 
they are trying to get all they think they can.” 21 

Of course, the Germans were also trying to get the best terms possible—hence 
the deadlock. By December 31 the situation could no longer be resolved by lower- 
level negotiations. 22 As was typical for Stalin, he had waited until all sides had had 
their say, and now he formally entered the fray as the “good cop” trying to reach 
a compromise arrangement. 



100 Feeding the German Eagle 


The first economic summit on December 31 included all the major players 
and lasted three hours but did not resolve the outstanding issues. Ritter recounted 
the meeting as follows. 

On the whole M. Stalin appeared not to be in a very friendly mood. . . . Although on the 
individual points he showed more understanding of German needs than the Soviet 
negotiators had previously done, he steadfastly insisted on the Soviet wishes brought 
forward by him, which, to be sure, are quite limited compared to previous Soviet demands. 
... He [also] said that the Soviet Government did not consider the treaty as an ordinary 
trade agreement, but as one of mutual assistance. 23 

Stalin agreed to deliver some scrap iron, but not the full 200,000 tons the Germans 
wanted. On the other hand, he did agree to ship 100,000 tons of chromium ore in 
1940 and larger amounts in 1941. He also agreed to keep his machine-tool 
requests to a minimum and to allow the 50 percent freight reduction on soybean 
shipments from Manchuria, but he reiterated Molotov’s complaint about German 
aircraft prices and reemphasized Soviet desire to receive German turrets within the 
year. 

For their part, the Germans were disappointed by the proposed iron and 
nonferrous metals totals and also considered it impossible to deliver turrets and 
industrial plants in the short period requested by the Soviets. Ritter also restated 
the German argument for charging licensing fees on aircraft models. 

But the real question was how quickly the two accounts should balance. The 
Germans, referring to the September 28 treaty, claimed that the German deliveries 
would lag behind the Soviets at least until the fifth quarter. Stalin responded that 
the delivery totals must balance by the end of the year. Ambassador Ritter noted, 
“The detailed discussion on this point did not lead to any understanding,” and 
with that the meeting ended and the new year began. 24 

SECOND MOSCOW ECONOMIC SUMMIT, JANUARY 29,1940 

The last day of the year had finally brought the Germans a major break in the 
economic negotiations, but the discussions had still followed Stalin’s December 
25, forty-point program, a plan that Molotov repeated for a third time during his 
January 7 talk with Schulenburg. 25 It seemed obvious to Schnurre, at any rate, that 
this new agenda was about as far as the Soviets were going to go. Now it was up 
to Hitler. In particular, would he provide the key items the Soviets wanted and 
lower the “utopian” 300 million RM for aircraft and 152 million RM for the 
Liitzow stipulated by Goring and Raeder? To persuade Hitler and help him 
convince reluctant military and political officials, Ritter returned to Berlin on 
January 3. 26 

Hitler, however, apparently needed no persuading, and the ensuing weeks saw 
the Germans debate substantial counterproposals in preparation for a second 
summit meeting with Stalin at the end of January. The WiRuAmt continued its 
usual conversations about various aspects of the relationship, particularly the 



The Final Plan: Part I 101 


possible connection to the Far East. 27 More important, Hitler and major German 
figures, such as Keitel, Thomas, Ritter, and Raeder, held a series of conferences 
on January 8, 9, 12, and 13 in which the Fuhrer pushed for a quick conclusion to 
the negotiations and “gave the general order that the reduced Soviet demands be 
handled with accommodating goodwill.” 28 Over the objections of some in the 
military and in the economic agencies, Hitler also reinforced the Foreign Office’s 
request to keep German prices at pre-war levels, agreed to the Soviet offer of 38 
to 42 percent iron ore, and decided how many machine tools, turrets, and other 
crucial items could be shipped by what dates. 29 

Although this response was generally favorable to the Soviet requests, there 
were still some clear signals that the Germans did not trust the Russians and that 
Hitler saw the economic arrangement as merely another “marriage of 
convenience.” Many businesses remained reluctant to deal with Russian tactics of 
“wait and let them starve” 30 when so many lucrative contracts were available at 
home. Military and economic officials also believed that their supplies were 
threatened by the new contracts with the Soviet Union. As a result, Schnurre and 
Schulenburg had to negotiate with disgruntled Soviet leaders who protested about 
the difficulty they were having placing orders in Germany. 31 

But these German subordinates were merely reflecting an ambivalence that 
went to the very top of the Nazi structure. According to Raeder, Hitler even 
ordered the navy “to delay as long as possible giving plans of the Bismarck class 
as well as the hull of the Luetzow to Russia, since he hopes to avoid this altogether 
if the war develops favourably.” 32 The new trade treaty might be a necessity for the 
moment, but Hitler meant to break free from its constraints the first chance he had, 
preferably later that same year after a successful attack in the west. 33 

In the meantime, however, the economic and political reasons for closer 
German-Soviet relations were again thrown into sharp relief by ongoing military 
operations. Although conservation and the phony war had kept the German raw- 
material situation from deteriorating as rapidly as first feared, the Germans were 
still counting on sixty thousand tons of Russian oil a month just to maintain their 
current stocks. If a major campaign began or if the Soviets failed to deliver their 
allotted totals, oil stocks would evaporate in a matter of months. 34 Grain reserves, 
previously considered fairly safe, also appeared increasingly tenuous, as the 
Germans faced a 1.6 million-ton shortfall for 1940 even under optimal 
conditions. 35 If there were a poor harvest and if the Soviets failed to deliver their 
roughly 1 million tons of foodstuffs, the German people might soon be facing a 
repeat of the winter of 1916-17, 

The ongoing Finnish disaster hurt both parties, and their mutual problems in 
the region strengthened their need to cooperate and to end the fighting. The war 
drained Soviet resources, tarnished the already low reputation of the Soviet 
military, and invited intervention by the West. 36 It also reduced Soviet deliveries 
to Germany and imposed a de-facto partial blockade on German trade in the 
Baltic. 37 In fact, the Soviets were finally starting to overwhelm the Finns, but the 
impression remained that “the Russians are stuck quite fast in Finland.” 38 



102 Feeding the German Eagle 


Realizing their common cause, the economic negotiators did make some 
progress during January. 39 On January 1, a tariff and toll treaty was added to the 
December 23 accords on air and rail traffic. 40 An agreement for a synthetic fuel 
plant from I. G. Farben seemed increasingly likely by mid-month. 41 A contract for 
208 kilograms of platinum was signed on January 20. 42 And the first commercial 
air route from Berlin to Moscow opened on January 22, though it was delayed one 
day because the cold weather kept the plane stranded in Konigsberg. 43 

But without a clear commitment by the Germans to the Soviet terms, Stalin 
had little reason to support the Germans wholeheartedly. Consequently, Schnurre 
was soon complaining that “the Russians [were] showing extraordinary 
stubbornness,” 44 and the navy was expressing its concern about “difficulties in 
German-Soviet trade negotiations.” 45 By Januaiy 2, for example, the grain treaty 
hit another snag over prices. 46 The Soviets also began complaining about delays 
in German coal shipments 47 and later even threatened sanctions under the terms 
of the August 19 treaty. 48 

Soviet deliveries also lagged behind promised amounts. Oil shipments via 
Przemysl, for instance, fell 34,000 tons short in January, according to one 
account. 49 Despite various assurances, 50 soybean shipments from the Far East never 
even began. 51 The Germans had so few shipments to show for their efforts that 
they actually started marking some of their goods from Bohemia as “Made in 
Russia” in order “to show the German people how much ‘help’ is already coming 
from the Soviets.” 52 Although the terrible weather, 53 the exigencies of war, the 
Soviet bureaucracy, and the still-confused transportation situation all obviously 
limited the items the Soviets could send the Germans (and vice versa in the case 
of German coal shipments to the USSR), some of these delays were probably an 
intentional reminder to the Germans that substantial deliveries would begin only 
after the lull economic agreement had been signed. 

A few Germans, particularly those trying to reach a final settlement, seemed 
to have gotten the message. Ritter, for example, denounced the high prices 
(roughly 50 percent above pre-war) being put forth by a few German firms and 
threatened to cut the special government trade subsidy ( Zusatz-Ausgleichs- 
Verfahren ) to those firms that did not bring their rates into line with the general 
scheme of pre-war prices. He also petitioned German businesses to conclude their 
delivery contracts with the USSR as quickly as possible “in order to strengthen the 
German position and to clear away the great mistrust of the Russians.” 54 

German efforts to meet Stalin’s demands culminated in a second economic 
summit late on the twenty-ninth. Ritter began by offering Hitler’s new concessions 
on what items Germany could afford to send and when. Unsatisfied, Stalin 
proposed splitting the treaty into two parts, one for each of the next two years, with 
totals balancing at the end of each year. Ritter agreed in theory to the dual-treaty 
system, but again argued that the September 28 agreement had envisioned delayed 
transfers as the Germans were proposing. These were not, as Stalin had 
characterized them, “credits.” Ritter also repeated the German request for more 
extensive nonferrous metal deliveries up front, because Germany lacked these raw 



The Final Plan: Part I 103 


materials in sufficient quantities to handle the Soviet demands. Stalin again 
parried the German requests and refused to budge from his earlier position. 
Mikoyan then counterthrusted by reiterating the Soviet threat to invoke sanctions 
against the Germans because of their lagging deliveries under the August 19 
treaty. 55 

On that discordant note, the meeting broke up at midnight. The Germans had 
come closer to Stalin’s terms, but not close enough, and Stalin refused to give any 
more ground. The ball was still in the German court. As Schnurre had been 
warning since the first summit meeting, the Germans would have to be even more 
accommodating if they expected to reach a final settlement. 

THIRD MOSCOW ECONOMIC SUMMIT, FEBRUARY 8 

With two summits down, the German negotiators hoped that the third time 
would be the charm and began preparing yet another offer. Both sides, however, 
were coming close to the end of their respective ropes, and there were still major 
differences over pre-shipments of Soviet metals, access to German technology, and 
the overriding issue of when the two accounts should balance. 

But the Germans were still the ones pursuing, trying to wrap up the deal in 
time to prepare adequately for the upcoming conflict in the West. As one Foreign 
Office report explained, since Soviet raw-material exports were “simply 
irreplaceable,” “the breakdown of a German-Soviet agreement must be avoided at 
all costs.” 56 

The Soviets, on the other hand, still had less immediate economic incentive 
than the Germans and certainly did not want to encourage Allied intervention in 
Finland or the Caucasus by appearing too cozy with the Nazis. Regardless of the 
harsh winter and the resulting desperate German coal situation, therefore, the 
Russians continued to demand increased coal deliveries. 57 They also began raising 
problems on short-term credit arrangements. 58 

Deciding it was now or never, Ribbentrop attempted to break the deadlock by 
sending a personal letter to Stalin on February 3 to plead the German case. The 
Foreign Minister rejected the idea of separate treaties, because this plan would 
decrease the raw materials sent to Germany in 1940. He then returned to the 
political principle on which the initial German proposals had been based, arguing 
that Soviet gains in Eastern Europe, as a result of the German victory in Poland, 
should “be considered ... as a not inconsiderable advance payment by Germany 
and cited as an important reason justifying our desire to obtain support now, in 
continuing the war against England and France, by as rapid and as extensive 
deliveries of raw materials from the Soviet Government as possible.” 59 

As in the negotiations leading up to the Non-Aggression Pact, this direct 
approach seems to have tipped the balance and convinced Stalin that the time had 
come to seal the deal. The two sides, therefore, held a third and final economic 
summit in Moscow at one in the morning on the eighth. As usual, Stalin was well 
versed in the details of the negotiations and dominated the meeting. 60 He jumped 



104 Feeding the German Eagle 


right into the discussion by exclaiming, “The letter from Foreign Minister von 
Ribbentrop altered the situation.” He agreed that only one treaty should be signed 
in which the Soviets would send 420 to 430 million RM (in addition to the 
amounts agreed to in the August 19 treaty) within twelve months in return for an 
equivalent amount within fifteen months. An additional 220 to 230 million RM 
in goods would be sent during the ensuing six months in exchange for a like 
amount over one year. All these totals, however, must balance every six months 
in the first year and every three months thereafter. Finally, Stalin agreed to send 
some additional metals from months twelve to eighteen and to allow the Germans 
to station a mother ship in Murmansk waters for processing fish catches. 61 

Ritter thanked Stalin for “the accommodating spirit” and offered some of his 
own concessions on German deliveries: the plans for the Bismarck, drawings of 
28-cm triple turrets, 20.3-cm guns for the cruiser Liitzow, and technical assistance 
in constructing 28-cm and 38-cm turrets for Soviet ships initially designed for 30- 
cm turrets. 62 

Having traded concessions for an hour, the parties adjourned and the long- 
awaited deal was now all but signed. Although the Germans remained hesitant 
about some of the arrangements to balance accounts, Ritter now believed that a 
treaty “can be ready for signature within the next few days.” 63 

SIGNING ON THE DOTTED LINE, FEBRUARY 11 

Following Ribbentrop’s letter and especially following the third economic 
summit, the negotiations that had previously been stuck in neutral suddenly kicked 
into high gear. On the eighth, the Americans noted that the Germans were 
“somewhat better satisfied with the general progress of their negotiations with the 
Soviets.” 64 By the ninth, Ritter reported that in his talk that day with Mikoyan, 
“The previous pettifogging [schikandser] methods have clearly been replaced by 
a certain ease of manner.” 65 Finally, having already consumed more than their fair 
share of coffee, Crimean champagne, and vodka, the bedraggled negotiators 
“decided to alter the calendar and correspondingly lengthen February 11” in order 
to finish their work. And at six in the morning, an exhausted Mikoyan, Ritter, and 
Schnurre were finally able to sign their names to the much-anticipated economic 
treaty. 66 

The terms of the treaty followed those laid down in the three summits, 
particularly that of February 8. In total, the Soviets would ship about 650 million 
RM in goods over eighteen months and receive an equivalent amount over twenty- 
seven months. Plenipotentiaries would make sure the accounts balanced every six 
months over the first year and every three months thereafter. The agreement also 
called for the 50 percent reduction in freight rates for Manchurian soybeans as 
well as 30 million RM in Soviet oil shipments from Drohobycz and Boryslav in 
return for 20 million RM in German coal and 10 million RM in steel tubing. The 
specific Soviet resources and German war materials and industrial goods were 
included in a series of lists attached to the main document. But the main items 



The Final Plan: Part I 105 


were 1 million tons of grain, 900,000 tons of oil, and more than 500,000 tons of 
various metal ores (most of it iron ore) in exchange for synthetic material plants, 
ships, turrets, machine tools, and coal. 67 

The “hard fight,” as Schnurre called it, was finally over. But who had won? 
Schnurre understandably played up his accomplishments and focused on the 
delayed German payments, the planned raw-material deliveries, and access to the 
Far East. Including the August 19 treaty and third-party buying, Soviet shipments 
and services would amount to 800 million RM in the first year alone and would 
in effect mean “a wide open door to the East for us.” 68 Hilger described the 
agreement in similar terms and explained that “British efforts at an economic 
blockade of Germany had been weakened considerably.” 69 

On the other hand, Ribbentrop described the Russians as having been “very 
hard bargainers” in these economic negotiations. 70 In fact, as even Schnurre had 
to admit, 71 the vague promises of the September 28 agreement had been 
dramatically reshaped to fit many of Stalin’ s wishes. No quick agreement had been 
signed as the Germans had wanted, and consequently only a trickle of Soviet raw 
materials had flowed into Germany so far. Furthermore, despite the bottlenecks 
that already existed in the Germany economy, the “industrial deliveries” of the 
earlier accords had been transformed into massive military support in this new 
treaty, with the Soviets getting most of the technology and much of the equipment 
they had wanted. The Soviets had also avoided the German demand for nonferrous 
metal shipments up front. Even more important, Stalin had forced through the 
stipulation that the accounts must balance at specific intervals despite the obvious 
difficulty this would pose for the Germans. 

Though largely a compromise that had stretched both sides to the limits of 
what their respective systems could comfortably handle, this treaty probably 
favored the Soviet Union—not surprising given Stalin’s close supervision of the 
negotiating process. Germany received enough raw materials to keep it in the war, 
but in limited amounts and at such a cost that they probably (and under Stalin’s 
watchful eye, definitely) would not provide a decisive edge against the Allies in 
the short term. The war, therefore, was likely to drag on into 1941 and beyond, 
making Germany ever more dependent on Soviet resources and allowing Stalin to 
twist the screws even tighter in future negotiations. In the meantime, the Soviet 
Union would receive the technology and equipment necessary to rearm. 

But there was the catch. Who won in the new German-Soviet economic 
agreement as well as in the earlier political agreements depended largely on the 
course of the war. The World War I-style war of attrition that most expected 
would obviously suit Soviet interests the best. But a negotiated peace would still 
leave the Soviet Union with a solid economic and political foundation for world- 
power status. A quick victoiy by the Allies might be dangerous to the USSR. A 
quick Nazi success even more so. But the former was practically impossible, and 
the common wisdom of the day thought the latter also improbable. As usual, the 
cautious Stalin had taken the most logical option presented him, the one most 
likely to help the Soviet Union rearm and at the same time to keep the Germans 



106 Feeding the German Eagle 


fighting but not winning against the West. Unfortunately for Stalin, history does 
not always follow the dictates of logic, especially with Adolf Hitler in the picture. 

NOTES 

1. BAMA, RW 45/13b, 22a. 

2. PA, R 106231, 452797. 

3. FRUS, 1939, 1: 498. 

4. DGFP, D, 8: 558-59, doc. 474. 

5. DGFP, D, 8: 560, doc. 476. 

6. As quoted in Read and Fisher, 439. 

7. DGFP, D, 8: 570-72, doc. 484. 

8. DGFP, D, 8: 570-72, doc. 484. 

9. According to Friedrich Gaus, Under State Secretary for Legal Affairs in the 
German Foreign Office, “It is certainly an error on Molotov’s part when he says that the 
expression ‘industrial deliveries’ was chosen in the Moscow negotiations only because the 
correspondence was to be published. The question whether and to what extent the German 
deliveries were to include deliveries of a military nature was never discussed at all, at the 
time” (DGFP, D, 8: 587-88, doc. 498). 

10. DGFP, D, 8: 574-75, doc. 487. 

11. BAMA/OKW/WfSt/Propaganda, “Industrie-, Wirtschafts, und Rohstoff-Fragen 
1939-1942,” RW 4/v.308, 101. 

12. BAMA, RW 19/335, 267. This new promise would again be delayed, and Soviet 
oil shipments would not reach the 100,000 ton mark until April. See Appendix A, Tables 
3.1 and 3.2, for two sets of figures showing Soviet oil exports to Germany. 

13. For the air treaty, seeBAAP/BM, “Luftfahrtbeziehungenzwischen Deutschland 
und der UdSSR 1929-1941 09.02/336, 58-88; for the train treaty, see the 200-plus pages 
scattered throughout BA, R15/V/43-, and for a general overview of both, see “Unmittelbarer 
Eisenbahnguterverkehr Deutschland-UdSSR,”D/'e Ostwirtschaft, December 1939,145-46. 
Note that the main part of the train agreement included the transfer stations called for by 
the Soviets. 

14. Dallin, Foreign Policy, 425. 

15. IfW/RA, “Rundschreiben (3.1.40),” YY2389, 1. 

16. Dallin, Foreign Policy , 158 & 182-83, and Weinberg, Germany and the Soviet 
Union, 89-90. 

17. Philbin, 72. 

18. Josef Goebbels, The Goebbels Diaries, 1939-1941, 1982, ed. Fred Taylor (New 
York: Penguin, 1984), 76. 

19. Werth, 71. 

20. PA, R 27805, 324667-797. 

21. DGFP, D, 8: 575, doc. 487, n. 3. 

22. See PA/PolAVest Europa, “Politische Angelegenheiten Russlands 1939-1940,” 
R 101388, 7: 334381, for a list of the 103 Soviet trade representatives then involved in the 
German-Soviet economic negotiations, 

23. DGFP , D, 8: 589, doc. 499. 

24. DGFP, D, 8: 589-96, doc. 499. 

25. DGFP, D, 8: 641-42, doc. 520. 

26. PA, R 106231, E041702-03. 




The Final Plan: Part I 107 


27. BAMA, RW19/244, 6-7, 13-14, 20, 28, & 36-37. 

28. PA, R 27805, 325580. 

29. PA, R 27805, 325532-91. For a more detailed list of the items to be shipped and 
their dates, see DGFP, D, 8: 673, doc. 543. 

30. MA/Technik, “Schauke/Jamm: Bericht tiber die Reise nach Moskau 
8.1-8.2.194O,”M40.737,22. 

31. DGFP, D, 8: 715-16, doc. 582. 

32. FCNA, 79. 

33. See Hitler’s January 30 strategy discussions with Goring as quoted in Carlyle, 

28. 

34. BAMA, RW 19/205, 92-93. 

35. BAMA, RW4/v.308, 92. 

36. FortheFrenchplanstosupporttheFinnsandattackBaku, see Weinberg, World 
at Arms, 73. 

37. FRUS, 1940,1: 540-41. 

38. Goebbels, 1939-41, 98. 

39. This was the conclusion of the Americans, at any rate (FRUS, 1940, 1: 540). 

40. Reichsbahnrat Gahrs, “Der deutsch-sowjetische Eisenbahnguter- und Tiertarif 
vom 1. Dezember 1940,” D/e Ostwirtschaft, November 1940, 131. 

41. PA, R 106231, E041715. 

42. PA, 7? 106231, E041706. 

43. For more information about this first flight, see BAAP, 09.02/336, 31-50. 

44. PA, R 106231, E041708. 

45. NC&A, 6: 982. 

46. PA, R 106231, E041694. 

47. PA, R 106231, E041704. 

48. PA, R 106231, 452838-39 & E041751-52. 

49. BAMA, RW 19/205, 90. 

50. DGFP, D, 8: 315, doc. 274, n. 2. 

51. PA, R 106231, E041700 & 452835, and PA/HaPol/Clodius, “Moraht Telegram 
(22.1.40),” R 106000. 

52. As quoted in Shirer, Berlin Diary, 206. 

53. Shirer called it “the coldest winter in German history.” See William L. Shirer, 
The Nightmare Years, 1930-1940 (Boston: Little, Brown, 1984), 475. 

54. MA, M 40.131, 4. 

55. DGFP, D, 8: 718-22, doc. 584. See Appendix A, Tables 1.5 and 1.6, for more 
information on monthly deliveries. Although these figures do not show what amounts fell 
under the August 19 treaty, they do show that from November through January the Soviets 
shipped goods totalling 14.7 million RM in comparison to 8.1 million RM for the Germans. 

56. PA, 77 106231, 452847. 

57. Goebbels, 1939-1941, 111, and PA, R 106231, 452848-49. 

58. IfW/RA, “Rundschreiben (2.2.40),” YY2389 , 2. 

59. DGFP, D, 8: 741, doc. 594. 

60. PA/Schnurre, Leben, 97. 

61. DGFP, D, 8: 752-53, doc. 600. 

62. DGFP, D, 8: 752-53, doc. 600. 

63. DGFP, D, 8: 756, doc. 602. 

64. FRUS, 1940, 1: 543. 




108 Feeding the German Eagle 


65. DGFP, D, 8: 757, doc. 602. 

66. PA/Schnurre, Leben , 97. 

67. For more details, see Appendix A, Table 5.1, and DGFP, D, 8: 763-69, doc. 
607. The Soviet naval list, for example, ran to forty-two pages by itself. 

68. NSR, 134. 

69. Hilger and Meyer, 317. 

70. NC&A,B, 1187. 

71. NSR, 131-34. 



Chapter 9 


Gas and Grain for Coal and 
Cruisers 


With the economic agreement finally signed, one might assume that the rest of the 
economic relationship would flow fairly smoothly. Fritz Tschunke’s description 
of the new arrangement typified the expectations of many: “Because of [the treaty], 
the door and the path to and from the Soviet Union have been thrown wide open. 
Through this door and over this path a broad stream of raw materials and 
foodstuffs will flow into Germany.” 1 

The accord, however, only set up guidelines for specific delivery contracts. So 
it was now up to the individual businesses and agencies to negotiate on prices and 
terms of delivery. As with the general discussions just concluded, these new talks 
would again be long and difficult, the major issues not being resolved for another 
four months. 

Both sides also had to muster the political will to ship the items assigned to 
them. What with the war, the weather, the poor transportation system, the 
bureaucratic haggling, and the continuing distrust between the two sides, such 
deliveries would prove easier said than done. Shirer argued that the agreement 
“looks good on paper, but I would bet a lot the Russians deliver no more than a 
fraction of what they have promised.” 2 Ritter also “seemed somewhat doubtful as 
to Soviet compliance.” 3 The same could equally be said by the Soviets about Nazi 
Germany. 


A SLOW START, MARCH 8 

That contract negotiations and actual deliveries got off to a slow start in 
February and March should thus come as no surprise. The first trans-Siberian 



110 Feeding the German Eagle 


shipment, for example, did finally arrive in Germany but it was only three tons of 
Japanese tea. 4 This was hardly an auspicious beginning and one that was not 
followed up in any substantial way until June. 5 The Soviets were also dragging out 
the new oil negotiations and their oil shipments, though the delays with the latter 
seemed mainly due to poor weather. 6 By March 1, Ter-Nedden was reporting that 
some of the resources covered by the February treaty had begun flowing to 
Germany, but that many items were still being withheld. 7 

The worsening Finnish crisis and the resulting rumors of imminent Allied 
intervention also prompted the Soviets to keep some distance from the Germans. 
Border clashes in Poland increased sharply in late February and early March while 
exports to the Reich tailed off. 8 Fortunately for the Russians, the Finns had had 
enough, rejecting the Allied offer of support on March 2, accepting the basic 
Soviet terms on March 6, and officially surrendering on March 12. 9 The Soviet 
adventure in the frozen north had been at best a marginal victory. The threat of 
Allied intervention had already forced the Soviets into an early settlement with the 
Finns and would continue to make Stalin leery of working too closely with the 
Germans. 10 

The Germans were also delaying their negotiations and shipments. Among 
other problems, the Germans were busy organizing their own government trading 
monopoly to counter the Soviets’ system. Although businesses would continue to 
bargain for individual items, they would now do so under the aegis of various 
Berlin agencies, including a new Ministry of Economics sub-group called the 
Geschaftstelle fiir den deutsch-sowjetischen Wirtschaftsverkehr and designed to 
handle the continuing transportation problems. 11 In accordance with this basic 
philosophy, the Russia Committee’s Die Ostwirtschaft and Rundschreiben initially 
published only sketchy details of the February agreement, but specifically 
requested that all businesses direct their questions to the Russia Committee first. 12 
This way the Germans could keep internal competition down and strengthen their 
bargaining position with the USSR. Of course, as was the case with the Soviet 
bureaucracy, such a system would also result in even lengthier discussions, as each 
proposed step had to be shuttled up and down the administrative ladder first. 13 

On the other hand, because Soviet raw-material deliveries were dependent on 
German exports (thanks to Stalin’s balancing procedures), the Russia Committee 
thought that it was “ absolutely necessary to execute German deliveries in the 
agreed upon amounts and within the planned timeframes ,” 14 The Russia 
Committee repeatedly urged businesses to stick to pre-war prices in order to speed 
up the negotiating process. 15 Other agencies also called for “the rapid completion 
of the equipment contracted for.” 16 

Many in business and the government, however, still felt threatened by these 
new policies. Firms such as Otto Wolff were soon complaining that they were 
being forced into bad contracts. 17 Other companies insisted that they were 
practically giving away their industrial secrets and thereby creating new 
competitors. 18 Economic officials protested that the war economy could not afford 
to lose the steel required to produce goods for the Soviets. 19 



Gas and Grain for Coal and Cruisers 111 


GORING THE GO-BETWEEN, MARCH 29 

A month after the signing of the treaty, the two sides still seemed wary of the 
economic commitments they had made. But with warmer weather on the way and 
with the war in Finland coming to an end, the Germans at least seem to have 
expected that trade totals would finally take off. 20 Even Hitler appears to have been 
optimistic, writing to Mussolini on March 8, “The trade agreement which we have 
concluded with Russia, Duce, means a great deal in our situation!” 21 

After all they had been through in the economic negotiations so far, however, 
the Germans should have known better. Instead of dramatic increases in deliveries, 
March witnessed some of the most difficult bargaining yet, and trade figures 
actually declined. The Germans howled in protest, but to no avail. The Soviets 
refused to play their two aces (oil and grain) until they were safe from Western 
intervention and until contracts for the main items they wanted (coal and cruisers) 
were firmly in hand. 

Problems began, as they had in the fall, with the arrival in Berlin on the 
eighth of a sixty-man Soviet commercial mission headed again by Tevossyan. 22 
The usual suspicion and bureaucratic wrangling prevailed as the Soviets again 
criticized their hosts for hiding their latest equipment and for postponing contract 
talks. 23 

Negotiations for the various individual items were also becoming increasingly 
troublesome. By March 9, the licensing discussions with Otto Wolff for a Fischer- 
Tropsch synthetic fuel plant had reached a dead end, 24 and Soviet bargaining over 
an I. G. Farben hydrogenation plant was also proving “very difficult.” 25 The 
Foreign Ministry described the Soviet demands for almost unlimited access to 
engineering and construction sites and processes as practically insurmountable. 26 
Long-awaited contracts for platinum and iridium continued to languish, leaving 
Germany with only enough of these metals to last through April or May. 27 Finally, 
the Soviets launched a series of probing attacks on the by-now standard currency 
and payment procedures. 28 In general, the Reich Office for Foreign Trade 
complained that, despite strenuous efforts by German firms, talks had made no 
progress because of Soviet delays and excessive price demands. 29 

The Germans, of course, realized that Stalin was twisting their arms on price 
questions by pressing for German costs to stay equal to or below pre-war levels 
and then charging 20 to 300 percent above pre-war prices for oil. 30 But there was 
little they could do in the short term except to hold tight on the pre-war pricing 
policy 31 already agreed to and play along with the Soviet quid pro quo. The 
Germans hoped, therefore, that successful contracts on steel tubing 32 and aircraft 
models 33 would expedite negotiations on oil and other raw materials. 

Instead, Babarin complained to Ritter on March 15 that coal and ship talks 
had gone nowhere and that few German firms had begun serious discussions on 
deliveries to the Soviet Union. Ritter replied that constantly changing and 
excessive Soviet demands were the real cause of the problems. The German 
ambassador also noted that the progress of the coal and ship negotiations depended 
on Soviet willingness to send oil and grain. 34 



112 Feeding the German Eagle 


Here again was the crux of the deadlock. The Soviet delays and demands were 
normal operating procedure. But the Germans would not make concessions on the 
key items of coal and cruisers until the Soviets showed themselves willing to send 
gas and grain. The Soviets were still too worried about the West, still distrusted 
Germany too much, and were still too confident in their negotiating position to 
give in quickly to German objections. 

In short, the negotiations had reached yet another impasse. Soviet 
Ambassador Skvartsev returned to Moscow on March 21, ostensibly to consult 
with his superiors, 35 leaving Tevossyan, Krutikov, and Babarin to meet with Ritter 
and Schnurre on March 27. Schnurre began by complaining once again about 
Soviet grain and oil prices. Krutikov responded that the Germans had called off 
the grain talks themselves and now would have to agree to ship the requested 
planes within two months before grain negotiations could begin again. Even then, 
it would be too late to include 500,000 of the requested 850,000 tons. In the 
meantime, grain deliveries would be halted. So much for one of the two main 
German items. A furious Ritter explained that it was the Soviets who had ignored 
a March 12 German letter asking to restart the talks on the fifteenth. But Krutikov 
refused to budge on the grain issue and again protested that German coal prices 
were too high. 36 The next day Tevossyan repeated the Soviet aircraft demands to 
General Udet. 37 

The negotiations having stalled on pricing questions, Schnurre chaired a 
meeting to investigate ways to reinvigorate the talks. Those present noted that 
most German firms appeared to be charging roughly pre-war prices, while the 
Soviets were demanding about 15 to 25 percent above the August rates and much 
more for oil and grain. Despite this inequity, Schnurre called for more German 
concessions on delivery contracts to ease his negotiating position and to entice the 
Soviets into stable pricing procedures. 38 Similarly, Ritter sought “to secure a swift 
commencement of German deliveries,” even if that meant dipping into current 
stocks. 39 

Realizing their still desperate need for Soviet resources and Soviet neutrality 
in the fast-approaching “capitalist conflict,” Goring and Hitler quickly adopted 
this proposed strategy of concessions designed to assure a still-distrustful Stalin. 
On March 29, for example. Goring responded to Tevossyan’s grievances by 
promising aircraft deliveries within the requested two months and increasing the 
earlier German offer of 250,000 tons of coal to 390,000 tons, and at pre-war 
prices. On the other hand, Goring reemphasized the coal-oil price connection and 
implied that German businesses were not to blame for the slow pace of the current 
talks. Nonetheless, the “Russians showed themselves extremely satisfied with the 
course of the conversation,” as well they should have. 40 

Soviet negotiators probably would have been ecstatic had they been privy to 
the discussions the next day at a Goring-led meeting “to consider the further 
handling of business transactions with Russia.” In keeping with the new 
negotiating strategy, Goring declared that Russian raw materials were absolutely 
vital and that all contracts must therefore be fulfilled promptly. He then 



Gas and Grain for Coal and Cruisers 113 


highlighted Hitler’s explicit decision that “where reciprocal deliveries to the 
Russians are endangered, even German Wehrmacht deliveries must be held 
back.” 41 

OUR FRIEND MOLOTOV? APRIL 9 

As usual, the Germans had finally buckled to Soviet pressure and offered a 
series of concessions. But in the coming ten days, Stalin made no counteroffer. 
Why? Schulenburg concluded “that the Soviet Government is determined to cling 
to neutrality in the present war and to avoid as much as possible anything that 
might involve it in a conflict with the Western powers.” 42 Allied economic and 
political threats were obviously having some effect. 

The new German paradigm for negotiations with the Soviets was quickly put 
into effect. By the end of March, naval officials had already offered to sell the 
Liitzow for 82.4 million RM plus 30 percent for ammunition. 43 On April 4 an 
inter-agency meeting investigated ways to increase German shipments from 140 
million RM to 200 million RM during the first six months, 44 90 million of which 
would come from the military. 45 The Germans also made plans to ship 300,000 
tons of coal a month to the USSR and immediately began dispatching two trains 
a day to Przemysl carrying 1,000 tons total. 46 Simultaneously, government 
agencies continued their pressure on hesitant German businesses to adhere strictly 
to the pre-war pricing policy in order to alleviate Soviet distrust and expedite 
Soviet counterdeliveries. 47 

But the Soviets remained obstinate, having now added oil to their list of items 
not being shipped to Germany. 48 The Soviets also forced through changes in 
payment procedures and tried to triple the tariff rates they charged German 
customers. 49 Even more ominously, Schulenburg’s April 6 encounter with 
Mikoyan was decidedly chilly. Mikoyan blamed the Japanese (with some 
justification) for the difficulties in transit trade to the Far East, and he opposed the 
resumption of oil and grain shipments until the Germans began sending coal. 50 In 
Berlin, Tevossyan also remained aloof, rejecting German proposals for the Liitzow 
despite German protests that the Soviets had repeatedly altered their terms and 
thereby jeopardized the talks. 51 

A bewildered Ritter cabled Schulenburg on the ninth and requested that he 

call on Mikoyan and Molotov once again and inform them as follows:. . . That the German 
deliveries would get under way more slowly was a foregone conclusion. ... In view of the 
complicated nature of the deliveries and the manifold Soviet wishes it is natural that the 
German side will take rather longer to conclude the commercial contracts. The delays are 
largely occasioned by the Russians, who do not give the necessary technical data and 
specifications. Particularly troublesome is the fact that the Soviet representatives here keep 
making additional alterations in their wishes and demands, thus causing loss of time. 52 

Ritter also pointed out that Germany’s fulfillment of the August 19 terms easily 
outpaced that of the Soviet Union, 53 proving the Reich’s willingness to cooperate. 



114 Feeding the German Eagle 


Trudging off to yet another tete-a-tete with old “stone bottom” (as Churchill 
liked to call Molotov), Schulenburg was “completely amazed” to find the normally 
bland Foreign Commissar “affability itself.” Tracing the grain and oil suspensions 
to the “excessive zeal of subordinate agencies,” Molotov agreed to resume 
immediately delivery of these items. A stunned Schulenburg concluded that “there 
is only one explanation for this about-face: our Scandinavian operations must have 
relieved the Soviet Government enormously—removed a great burden of anxiety, 
so to speak.” 54 

On April 9 the Germans had invaded Denmark and Norway, and the German 
and Allied forces were now engaged. This fighting ruled out the possibility of 
immediate Allied intervention in Finland or of “capitalist encirclement” of the 
Soviet Union and therefore succeeded in allaying Soviet concerns in a way that 
German economic concessions alone could not. The way finally, finally appeared 
open for full-scale trade to commence. 

WAR IN THE WEST, MAY 10 

Although Schulenburg described the Soviets as having made a complete 
“about face,” a “half turn” would be more accurate. Despite the increasingly bright 
future for German-Soviet economic relations, German concessions, better weather, 
and the battle in Norway had not yet eliminated all the remaining barriers. 
Elements in both countries remained hesitant, and tough bargaining continued on 
the key issues—grain, oil, coal, and cruisers. 

On the positive side of the ledger, trade did pick up during April. Soviet 
exports to Germany almost doubled, from 9.7 million RM in March to 16.7 
million RM, and German exports to the USSR more than tripled, from 2.6 to 8.1 
million RM. 55 Grain shipments from the USSR also jumped from 16 million to 56 
million tons. 56 And by the end of the month, the Germans had already delivered 
the two Dornier-115s, five Messerschmidt-110s, and two Junker-88s Goring had 
promised to send by the end of May. 57 

Contract negotiations also made rapid progress, starting with another friendly 
meeting between Tevossyan and Goring on April 12. 58 Over the next three weeks, 
at least eight contracts for German machines were signed, as was another platinum 
agreement. 59 Negotiations for major timber shipments were also coming along 
well. 60 A consortium of German banks even set up a special 150 million RM fund 
to help promote short-term trade not covered by the August or February 
agreements. 61 

On the other hand, trade and negotiations on certain key items remained 
problematic. Soviet oil 62 and items shipped via the USSR 63 still only trickled into 
the Reich, even though adequate transportation was no longer a major problem. 64 
Tea sent from Vladivostok on December 16 arrived in Germany only on April 16, 
and some November shipments from Iran had yet to reach the Reich nine months 
later. 65 In addition, the Soviets had almost scuttled talks on manganese with their 
high price demands. 66 Delivery of German synthetic-material plants also looked 



Gas and Grain for Coal and Cruisers 115 


increasingly questionable as the Soviets continued to require extensive guarantees 
and technical access that the German firms found impossible to provide. 67 

Technology transfers in particular continued to be a sore point with the 
Germans. On April 16 Molotov suddenly asked to buy German magnetic mines 
to protect Soviet ports such as Murmansk from British attacks. 68 Ribbentrop, 69 via 
Schulenburg, 70 politely but firmly denied the petition. Some Soviet requests were 
even sabotaged by high licensing fees from German firms reluctant to sell 
technologically advanced equipment to the USSR. 71 The navy also began 
complaining that their ship construction, such as on the aircraft carrier Graf 
Zeppelin , was being “delayed by transactions with Russia.” 72 

But the major problem was again the coal-cruiser-gas-grain nexus. Not 
surprisingly, the Germans made the first major concession by offering, on April 
19, to ship 400,000 tons of coal by the end of the year. That same day, Schnurre 
reported a tentative agreement for 4.7 million tons of coal to be shipped by May 
11, 1941. 73 Negotiating prices and delivery terms for this major treaty, however, 
lasted another month. In other words, the Germans were still hedging their bets 
until the Soviets made some similar concessions. 

One area of concern was grain. To handle these negotiations a German 
mission, led once again by Dassler, arrived in Moscow on April 18 for two weeks 
of intensive bargaining. Exportkleb, the Soviet agency in charge of grain exports, 
opened with an offer of 330,000 tons, claiming German delays had undermined 
the previous talks. Dassler, in turn, argued that “the guilt [for the delays] lies 
absolutely one-sidedly with Exportkleb ” and demanded that the Soviets reinstate 
their earlier offer of 830,000 tons at the same price as the October 26 agreement. 
The Soviets countered that they had no instructions to offer any more than 
330,000, in response to which an infuriated Dassler threatened to break off the 
talks and return to Berlin. 74 

As in the fall negotiations, these lower-level discussions had quickly reached 
the limit of the Soviet agency’s authority, and bigger guns had to be brought in. 
In this case Schulenburg intervened repeatedly, initially to no effect. The German 
Ambassador’s April 22 meeting with Mikoyan to discuss grain and other issues, 
for example, proved “difficult and unpleasant.” Soviet asbestos prices were 
“completely unacceptable,” and the Soviet grain offer remained 500,000 tons 
below their earlier promise. 75 Eventually, the Soviets did relent on April 26 and 
reinstate their earlier 830,000 ton offer, but with major provisos: delivery terms 
for 430,000 tons still had to be negotiated, and the entire amount was still subject 
to talks on types and prices. 76 

The negotiations concerning the cruiser Liitzow and Soviet oil shipments 
showed similar difficult but steady progress. By May 6 the Soviets had responded 
to the earlier German proposal of 109 million RM for the cruiser and ammunition 
with a counteroffer of 90 million RM. 77 On the tenth, with war in the West already 
having begun, the increasingly desperate Germans offered to split the difference 
at 100 million RM, even though “this price is not acceptable from a strictly 
commercial point of view.” 78 There was, of course, a string attached. The Soviets 



116 Feeding the German Eagle 


had to resolve the coal and oil contracts on a similar “middle-way” basis. 

So far the Soviets had refused to accept the Gulf price (the reigning standard 
for oil transactions) or even the Gulf price plus 20 percent for their oil and insisted 
on the price agreed to for the first oil contract the previous fall. That oil had cost 
the Germans two to three times the world average. 79 Instead of the earlier German 
offer of 36 million RM, Ritter was now willing to buy Soviet oil at 45 million RM, 
50 percent above the world price. Under a worst-case scenario, the German 
negotiators were even authorized to pay 53.75 million RM for oil and to accept the 
low coal price tendered by the Soviets if a deal could be concluded quickly. 80 

Desperation bred German concessions, but it also bred frustration with Soviet 
delaying tactics. In a lengthy report dated May 12, Ritter vented the pent-up 
German tiny with the USSR’s dithering. Stalin, however, had heard this German 
griping before and apparently paid it little heed. As always with the Soviets, their 
deliberate and delicate negotiating dance required one step backward for every two 
steps forward, and no rapid agreement on these major items was forthcoming. The 
USSR even began tentative economic negotiations with the British during this 
period, though the Soviets vociferously denied that they had taken the initiative 81 
and the Germans do not appear to have been too concerned. 82 Stalin probably 
intended merely to remind the Germans that the Soviets had other economic 
options, the Germans none. 

They had none, that is, except plundering conquered territoiy. Having just 
won a close-run thing in Scandinavia, Hitler was about to embark on another “loot 
and pillage” operation, this time directly against the Allies. And, as usual. Hitler 
was playing for high stakes at long odds. Although better off than many had 
expected, the war economy was still tottering on the edge of ruin and possessed 
raw-material stockpiles for only a short war. The victories over Denmark and 
Norway had merely exacerbated Germany’s already troublesome oil situation, 83 
and Germany’s rubber reserves were almost gone. 84 

Of course, these were exactly the items that the Soviets had refused so far to 
ship in great quantities, which raises the question of how important Soviet 
economic aid was to the German war effort against the West. Soviet strategic and 
psychological aid was obviously vital, since the Germans had to station only four 
regular and nine territorial divisions on the eastern border 85 and since Comintern 
propaganda was slowly eroding French morale. 86 Some historians, however, have 
also claimed that Soviet economic aid was significant if not decisive to the 
German military victory in France, arguing that “Guderian’s tanks operated 
largely on Soviet petrol as they dashed for the sea at Abbeville, the bombs that 
leveled Rotterdam contained Soviet guncotton, and the bullets that strafed British 
Tommies wading to the boats at Dunkirk were sheathed in Soviet cupro-nickel.” 87 

Dramatic, but wrong. By the end of May, the Soviets had shipped only 
155,000 tons of oil to the Reich in comparison to German oil stocks of 1,115,000 
tons, 88 8,600 tons of manganese in comparison to reserves of 230,000 tons, 89 and 
128,100 tons of grain in comparison to stockpiles of 4,693,000 tons. 90 And these 
were the most important categories. The rest of Soviet deliveries mattered even 



Gas and Grain for Coal and Cruisers 117 


less to Germany’s raw-material situation during the decisive first few weeks of the 
conflict in France. In short, Soviet economic aid had relatively little direct impact 
on the initial fighting in the West. 

Then why all the German concern about Soviet supplies? Even though Soviet 
deliveries had been relatively limited to this point, they were still projected to 
reach tremendous heights in the next few months. Since almost no one expected 
the war to end quickly, these Soviet shipments could still prove vital over the long 
haul, and the promise of their arrival allowed German military leaders to plan 
more confidently for an extended campaign. Much to everyone’s surprise, even 
Hitler’s, a lengthy struggle in France never materialized. 

FINAL CONTRACTS, MAY 28 

The war in the West and the German concessions that were offered as the 
conflict began finally appeared to give the Soviets what they wanted—security and 
an economic arrangement on their terms. Consequently, “from the beginning of 
May, negotiations which earlier had lasted months now required weeks and in 
many cases eight to ten days to be completed.” 91 Contracts on cotton, rags, horns, 
platinum, bristles, iridium, intestines, wood tar, and various machines were all 
concluded during the second half of the month. 92 

The two sides also moved toward resolution on the key questions of grain, oil, 
coal, and cruisers. By the fourteenth the Soviets had dropped their oil price from 
71.5 million RM to 55.2 million RM, 93 although they still refused to increase their 
shipments of one thousand tons a day, which Schnurre condemned as “completely 
insufficient,” until everything had been signed. 94 A few days later, however, 
Molotov tentatively accepted Ritter’s May 10 “middle-way” proposal. 95 

That agreed to, the details fell into place over the next ten days. The Soviets 
did try to start another bidding war after the arrival in Moscow of the Cripps 
mission from England, 96 and the worn-out Germans almost played along when 
Ritter proposed on May 22 to travel to Moscow with Schnurre; 97 but the process 
was already too far along, and a deal was arranged in fairly short order. By the 
fifteenth the grain treaty had been completed, 98 and by the twenty-second an 
understanding had been reached on the Liitzow that “very much impressed” the 
Russians. 99 On May 25 and 26 the oil contracts were signed at the world price plus 
50 percent. 100 On the twenty-sixth the Liitzow departed for Leningrad. 101 Finally, 
on May 27 the Germans ratified the Soviet coal treaty, and the next day the Soviets 
ratified the German oil treaty. 102 The major contracts had all been completed. 

In the meantime Soviet motives for signing these final contracts had changed 
somewhat. When the fighting in France first began, the Soviets had had their eyes 
on the final prize of economic and political security. Just as they were reaching for 
the brass ring, however, the rapid German victory in France tilted the playing 
field. The Germans themselves had been veiy nervous about their Ardennes plan. 
They expected a much longer struggle and had planned for a “second wave” of 
troops and material. 103 Happily for Hitler, the French command's early errors 



118 Feeding the German Eagle 


resulted in the rapid conquest of France and the Low Countries. No one was more 
surprised or more dismayed than Stalin. 

NOTES 

1. Fritz Tschunke, “Deutsch-russische Wirtschaftsabkommen vom 11. Februar 
1940,” Ost-Europa-Markt, Mar/Apr 1940, 53. 

2. Shirer, Berlin Diary , 203. 

3. FRUS, 1940, 1: 542. 

4. Birkenfeld, Wirtschaftspartner, 506-7. The journey had taken fifty-five days, 
apparently the norm for this route (BAMA, RW19/244, 71). 

5. See Appendix A, Table 4.2, for figures on German imports via the Soviet Union. 
Although soya bean shipments appear to have begun by early March (BAMA, RW 19/244, 
71), the total of all goods shipped to the Reich across the USSR amounted to only about 
five hundred tons by the end of May. 

6. BAMA, RW 19/2814, J005970-71, and BAMA, RW4/v.308, 37 & 42. 

7. BAMA, RW 19/244, 62-63. 

8. McSherry, 2: 67-70, 78 & 84. 

9. Read and Fisher, 414-17. 

10. Reinforcing this concern, the Allies began a policy of economic pressure on the 
USSR with the internment of the Soviet transports Selenga and Vladimir Mayakovsky in 
the far east. See W. N. Medlicott. The Economic Blockade, 2 vols. (London: Longmans, 
1952), 1: 324. 

11. BAMA, RW 19/244, 70. Ter-Nedden, who was already head of the Russia 
Committee’s import section, became the head of this new agency. 

12. IfW/RA, “Rundschreiben (15.2.40),” YY2389, 1, andDr. W. Ter-Nedden, “Das 
deutsch-sowjetische Wirtschaftsabkommen vom 11. Februar 1940,” Die Ostwirtschaft, 
Feb/Mar 1940, 17-18. 

13. For a more detailed discussion of the changing status of the Russia Committee 
and similar government agencies, see Perrey, 304-8. 

14. IfW/RA, “Rundschreiben (2.3.40),” YY2389, 2. Italics are in the original. 

15. BA/RFM, “Ein- und AusfuhrangelegenheitenDeutschland-Russland (28.2.40),” 
R 17315, 2-4. 

16. BAMA, RW4/v.308, 85. 

17. RWW/Otto WolfORuBland, “Rohren (1.3.40),” 72-48-4. 

18. Perrey, 319. 

19. BAMA, RW 19/173, 57. 

20. Shirer, Nightmare Years, 476. 

21. As quoted in Noakes and Pridham, 2:781. 

22. IfW/RA, “Rundschreiben (14.3.40),” YY2389, 1. 

23. For Tevossyan’s inspection of German turret and armor-plating production 
procedures, see UA Krupp/FAH, “Betr.: Besuch des Volkskommissars Tevossyan 
(16.3.40),” FAHIV C 168. For general complaints, see PA/Ritter, “Deutsch-sowjetische 
Wirtschaftsabkommen (22.3.40),” R 27806, 324387. 

24. RWW/Otto Wolfi/Rufiland, “Vermerk (9.3.40),” 72-41-5, 1-2. 

25. RWW/Otto Wolff/RuBland, “Vermerk (17.3.40),” 72-41-5. 

26. PA/HaPol/Clodius, “Ringer Telegram (13.3.40),” R 106000. 

27. BAMA, RW 19/336, 158. 



Gas and Grain for Coal and Cruisers 119 


28. IfW/RA, “Rundschreiben (23.3.40),” YY2389, 2-3. 

29. BA, R 9/1/635, 2: 84. 

30. PA, R 106232, E041765-67. 

31. IfW/RA, “Rundschreiben (23.3.40),” YY2389, 2. 

32. PA, R 106232, E041764. 

3 3. The Soviets appeared particularly eager to acquire various German planes. Stalin 
even gave Yakovlev special authority to push through an aircraft deal over Tevossyan’s 
objections (Bialer, 118-20). 

34. DGFP, D, 8: 923-24, doc. 677. 

35. PA, Fach 65, 3: 357709-11. 

36. PA, R 27806, 324393-96. 

37. PA, R 27806, 324391-92. 

38. PA, R 106232, E041778-81. 

39. BAMA, RW19/244, 85. 

40. PA, R 106232, 453132-33, and DGFP, D, 9: 59, doc. 32, n. 1. 

41. DGFP, D, 9:60, doc. 32. For the slightly longer WiRuAmt version of the meeting 
and more information on the new sub-agency set up to supervise these plans, see BAMA, 
RW 19/173, 29-31. 

42. NSR, 136. 

43. PA, R 27806, 324387-88. 

44. BAMA, RW 19/244, 92. 

45. BAMA, RW 19/244, 99-100. 

46. BAMA, RW 19/244, 92 & 100. 

47. BA/EfA/Priifungstelle Maschinenbau, “Allegemeine Ausfuhrangelegenheiten 
(4.4.40),” R 9/VIII/7, 5-7. 

48. BAMA, RW 19/244, 90. 

49. IfW/RA, “Rundschreiben (6.4.40),” YY2389. 

50. DGFP, D, 9: 81-82, doc. 50-51. 

51. PA, R27806, 324385-86. 

52. DGFP,V, 9: 110-11, doc. 75. 

53. See Appendix A, Tables 1.7 and 1.8, for German and Soviet fulfillment of the 
various treaty terms. Although by May the Soviets were outpacing the Germans under the 
February 11 accord, they had fallen significantly behind on the August 19 agreement. Of 
course, the Germans had failed to include in the August treaty the balancing clause that 
Stalin had introduced into the February settlement, so they lacked the legal recourse that 
the Soviets possessed. 

54. NSR, 139—40, and DGFP, D, 9: 106, doc. 70. 

55. Appendix A, Tables 1.5 and 1.6. 

56. Appendix A, Table 3.5. 

57. PA/flaPol/Clodius, “Schnurre Telegram (29.4.40),” R 106000. The Soviets 
appear to have been very satisfied with their purchase. According to M. I. Gallai, a member 
of the Soviet commercial mission to Germany, “the airplanes turned out to be really good. 
They contained what comes only from real combat experience and from no other source: 
simplicity, accessibility to the mass [-trained] pilot of average skill, and ease of operation. 
These were planes for soldiers” (Bialer, 129). 

58. DGFP , D, 9: 157-58, doc. 109. 



120 Feeding the German Eagle 


5 9. Eiehler, 140, and BAAP/BM, Vertretem der deutschen Wirtschaft in Moskau 
1940-1941,” 09.02/307-8, 16-17. See the rest of this 334-page report for an exhaustive 
description of the German firms negotiating in Moscow and the contracts they signed. 

60. PA/HaPol/Clodius, “Schmitz Telegram (23.4.40),” R 106000. 

61. IfW/RA, “Rundschreiben (29.4.40),” YY2389, 1-2, and “Kredithilfe bei 
Lieferungen nach der UdSSR,” Die Ostwirtschaft, May/June 1940, 53-54. 

62. Appendix A, Tables 3.1 and 3.2. 

63. See Appendix A, Table 4.2, and BAMA, RW 19/244, 112-13. Schulenburg 
complained to Molotov on April 27, but the Foreign Commissar put the entire blame on the 
Japanese (DGFP, D, 9: 249, doc. 175). 

64. For oil, see PA, R 106232, E041801-02; for transit trade to the far east, see 
Weinberg, Germany and the Soviet Union, 72-73; and for transit trade to Iran, see PA, R 
106232, E041804. 

65. BA, R 43/11/1490, 22b. 

66. PA/HaPol/Clodius, “Busch Telegram (19.4.40),” R 106000. 

67. BAMA, RW 19/336, 197 & 210, and BA/RFM, “Ein- und 

Ausfuhrangelegenheiten Deutschland-Russland (10.4.40),” R 2/17315, 1-2. 

68. DGFP, D, 9: 151-52, doc. 105. 

69. DGFP, D, 9: 213-14, doc. 146. 

70. PA, Fach 65, 3: 357727. 

71. For one example, see MA/Generaldirektion, “Niederschrift #5 tiber die 
Vorstandssitzung vom 15. April 1940 ,”M 12.017, 5: 2. 

72. FCNA, 101. 

73. Eiehler, 139. 

74. BA/RfEuL/RfG/Siburg, “Bericht uber die Dienstreise nach Moskau (4.5.40),” 
R 15/VJI/46, 1-4. 

75. PA, R 106232, 453148^19. 

76. BA/RfEuL/RfG/Siburg, “Bericht uber die Dienstreise nach Moskau (4.5.40),” 
R 15/VII/46,4. For the actual terms of the April 30 grain deal, see BA, R15/V/43, 4/30/40. 

77. PA, R 27806, 324383-84. 

78. PA, R 106232, 453160. 

79. PA, R 106232, 453156. 

80. DGFP, D, 9: 317-18, doc. 229. The Soviet price for German coal was apparently 
low enough that they could later reexport some of it to the Baltic States at a profit (BAMA, 
RW 19/244, 139). 

81. DGFP, D, 9: 248, doc. 174. 

82. BAMA, RW 19/244, 119. 

83. BAMA, RW 4/v.308, 117. 

84. BAMA, RW 19/206, 73. According to the data in Appendix A, Table 3.3, 
Germany’s two-month reserve of 28,200 tons at the beginning of the war had dropped to 
15,800 tons by May. Even worse, natural rubber stocks had plummeted from 17,000 to 
6,000 tons. 

85. Weinberg, Germany and the Soviet Union, 98. 

86. Watt, Setting the Scene, 60. 

87. This according to Nikolai Tolstoy as quoted in Andrew and Gordievsky, 251. 

88. Appendix A, Table 3.2. 

89. Appendix A, Table 3.4. 

90. Appendix A, Table 3.5. 



Gas and Grain for Coal and Cruisers 121 


91. IfW/RA, “Rundschreiben (25.7.40) ” YY2389,2. 

92. Appendix A, Table 5.3. 

93. PA, R 106232, E041810. 

94. PA, R 106232, E041809. 

95. PA, R 106232, E041808, and BAMA/OKH, “Kostring Letter (16.5.40),” RH 
2/2932, 125-26. 

96. Medlicott, 1:635-37. 

97. DGFP, D, 9: 412, doc. 300, and PA/HaPol/Clodius, “Telegram to Clodius 
(31.5.40),” R 106000. 

98. Appendix A, Table 5.3. 

99. DGFP, D, 9: 318, doc. 229, n. 4. The negotiators had apparently agreed on the 
100 million RM figure (Eichler, 139). 

100. BAMA, RW19/2814, 964-65. 

101. PA, R 106232, E041817. The Germans were very concerned that bad weather 
or enemy planes would sink the ship and thereby void all the Soviet counterdeliveries. 
After the cruiser arrived safely in Leningrad, the Germans began to worry that the Soviets 
were using the outfitting of the ship for industrial espionage—to investigate and later 
duplicate German construction techniques (PA/Schnurre, Leben, 97). 

102. DGFP, D, 9: 454, doc. 332. 

103. Forster, Dynamics of Volksgemeinschaft, 204. 



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Chapter 10 


Delivering the Goods 


With the European balance of power suddenly altered, Soviet interests changed 
dramatically. Whereas delay had previously allowed the Soviets to wring out the 
best terms possible, speed was now required to consolidate the economic position 
already achieved—hence the increasing pace of contract talks. Short-term security 
interests also became paramount—hence the quiet abandonment of vast 
construction projects that had already seemed questionable, given the difficulty of 
resolving issues of technology and timeframes, 1 but now appeared almost 
worthless. 2 Finally, the Soviets needed to encourage the Germans to continue their 
struggle with England—hence some of the upsurge in Soviet deliveries during the 
summer. 3 No sense infuriating your supposed ally. 

There was also no sense in appearing weak, however, especially once it 
became clear that England would stay in the war and that some of Stalin’s plan, 
to play “third-rejoicing” while Germany and the West slugged it out, could be 
salvaged. Negotiations, therefore, remained difficult throughout the summer as the 
Soviets continued their often tough bargaining. If Stalin was trying to appease the 
Germans, as some historians have suggested, there is little evidence of such a 
policy in the economic relationship. In general, Kostring’s reading of the Soviet 
situation seems accurate. Stalin would remain loyal to the strict terms of his 
agreements with Germany but would do so only as long as he could gain some 
advantage from the arrangement. 4 For the moment, he felt he had the upper hand. 

BIG IS BAD, JUNE 10 

With complete victory apparently theirs, the Germans were euphoric, and they 
quickly began planning for their postwar world. 5 One of the key questions was 



124 Feeding the German Eagle 


what role the USSR would play in the new German Groflraumwirtschaft. Clodius 
and Ritter both assumed that the Reich’s improved economic situation would offer 
new leverage over the Soviets and push the USSR into even closer economic 
partnership as raw-material supplier to the rest of Europe. 6 

The next two weeks seemed to reinforce this German confidence. Having 
already captured huge stocks of petroleum products in France, 7 the Germans 
further buttressed their oil position when on May 29 the Rumanian government 
chose what it saw as the lesser of two evils and threw in its lot with Hitler. 8 By 
June 10 Italy had joined the war, and the Germans’ final offensive in France had 
begun. Despite their still-low rubber stocks, OKIV and the Ministry of Economics 
felt so secure that they cancelled the construction of a synthetic-rubber plant at 
Rattwitz because “cheaper and better natural rubber could be obtained from 
Singapore.” 9 

Such enthusiastic statements, however, would prove wildly optimistic. 
Already during the first week of June, there were disturbing clouds looming on the 
horizon. Despite the ongoing Axis military success, the British were able to 
evacuate more than 300,000 men from Dunkirk. Led by Churchill, these men 
would continue to resist the German threat, leaving Hitler with no good options 
to end the war against England quickly. 

Just as significant, the Soviets were obviously unwilling to perform the part 
allotted to them as Germany’s raw-material supplier and junior partner. Instead 
of being passive, they rushed to consolidate their claims in Eastern Europe. By the 
end of May, the Soviet press had begun attacking Finland once more, this time as 
a prelude to a move on the Petsamo nickel mines. 10 The Soviets also began 
tightening the screws on the Baltic states and Rumania. 

German-Soviet economic relations similarly reflected the ambivalent Soviet 
attitude. Although the terms of payment 11 and prices largely favored the USSR, 
and although Schnurre believed that “German-Soviet deliveries were developing 
satisfactorily,” 12 the Soviets remained intransigent on a variety of issues. Captain 
von Baumbach, the German Naval Attache in Moscow, for example, reported 
“noticeable cooling off and technical difficulties on the part of the Russians,” 
which the navy interpreted as a possible attempt to undermine the economic 
relationship gradually. 13 

Transit deliveries, on the other hand, finally began creeping upwards, 14 and 
the Soviets even seemed on the verge of shipping twenty tons of Chinese wolfram, 
a deal that had been in the works since the beginning of the war. 15 But these totals 
were still far below earlier promises. 

The Soviets also agreed to a series of minor contracts on such items as flax, 
sulphur, manganese, presses, and compressors, 16 but they understandably 
continued to back away from almost all of the big, long-range projects. German 
firms increasingly complained about Soviet demands for low prices, quick 
construction, extended guarantees, and, most important, complete access to 
German technology. The German firm Krupp maintained that it would go along 
with such a project (in this case the selling of the Widia Process for hardening 



Delivering the Goods 125 


steel) only if the government forced it to and only if the government backed up the 
contract. 17 

These concerns came to a head during an inter-agency meeting on June 7. 
Ter-Nedden opened the discussion, describing the Soviet attitude since May 10 as 
somewhat improved but still unacceptable and Soviet methods as difficult, 
bordering on “chicanery.” Nonetheless, with the Soviets already rejecting a Buna 
(synthetic-rubber) plant, the Bismarck plans, and a hydrogenation facility, the 
German officials felt they might have to prop up some of the remaining 
negotiations for synthetic-material processes by covering 50 percent of the risk 
otherwise left to German firms. Surveying the wreckage of these major 
construction plans, Admiral Witzell concluded that the Soviets had been using 
these negotiations primarily for military and industrial espionage and had had no 
real intention of reaching a settlement. 18 

BESSARABIA AND BUKOVINA, JUNE 28 

Whether they had intended to buy or not, Soviet rejection of these major items 
essentially torpedoed the entire February treaty arrangement even before it had 
really gotten under way. Soviet actions also seriously called into question the 
whole Grofiraumwirtschafl concept, in which the Russians would dutifully supply 
the Germans with the resources the Reich needed. 

While Goring and others were following Ritter and Clodius in building 
theoretical castles in the fairy-tale land of total German domination, 19 the Soviets 
continued to recast the economic relationship in a form of their own choosing. 
Problems with third-party trade, 20 Soviet transportation, 21 terms of payment, 22 and 
long-term German construction projects 23 persisted. At the same time, growing 
Soviet influence in the Baltics threatened another vital segment of German trade. 
Schnurre estimated the Baltic shipments in 1940 at 200 million RM in foodstuffs 
and petroleum products and warned, “The consolidation of Russian influence in 
these areas will seriously endanger these necessary imports.” 24 The two sides did 
tentatively reach a special agreement on 110,000 tons of Soviet manganese in 
exchange for 55,000 tons of rolled steel, 25 but overall trade still lagged behind 
planned levels. 26 The continuing Soviet delays and the continuing distrust on both 
sides were having their inevitable effect. 

In general, the new trade relationship reflected changes in the Soviet military 
and economy. Having earlier begun massive military reorganization in response 
to the Finnish disaster, the Politburo now placed the whole economy on a war 
footing. 27 This massive military-industrial effort, however, left even fewer raw 
materials available for export and less transportation equipment to ship them, a 
point the Germans were quick to realize. 

While the sun still shone and the German armies were still occupied in 
France, Stalin was also busy making territorial hay. He started in the Baltic, 
quickly gobbling up already weakened Lithuania, Latvia, and Estonia. He then 
sliced off his share of the Rumanian pie. With the Iron Guard taking over 



126 Feeding the German Eagle 


Rumania on the twenty-second, the Soviets apparently decided it was now or never 
to acquire Bessarabia, a piece of territory assigned to them in the Pact. But the 
Soviets went even further and demanded the province of Bukovina as well. 28 After 
some sharp words with the Germans, 29 Molotov compromised on taking only 
Bessarabia and Northern Bukovina. Berlin decided not to intervene and pressured 
Rumania to go along with the deal, 30 which it did on the twenty-eighth. 


HITLER TURNS EAST, JULY 21 

Having eaten his fill, the Vozhd cautiously eyed his German partner to gauge 
his response. As a result, economic relations in July remained correct but hardly 
cordial. Although oil, grain, and metal shipments did arrive in roughly the agreed- 
upon amounts, 31 overall trade actually declined from June. 32 Stalin now promised 
to buy roughly 6,000 tons of copper and 1,300 tons of rubber from third parties, 
but the Germans insisted that the USSR fulfill its more substantial earlier 
agreements. 33 When the Germans asked for the return of the territory in Lithuania 
assigned to the Reich in the September 28 agreement, Molotov responded that the 
Soviets now wanted to hold on to the strip of land. 34 

The two sides did reach agreements on manganese deliveries 35 and on 
telephone and telegraph links. 36 But at the same time, German concerns about 
Soviet actions in the Baltics and Bessarabia/Bukovina and about the potential lost 
trade in wood and foodstuffs continued to grow. 37 Despite general Soviet promises 
to pay close attention to German economic interests in the newly conquered 
areas, 38 by the twenty-third Molotov had already reduced the planned yearly grain 
exports from Bessarabia to Germany from 290,000 to 100,000 tons. 39 

The Germans also wanted the previously offered quick delivery of the 
remaining 430,000 tons of grain from the May treaty. As usual, the Soviets tried 
to delay on the details, proposing to ship the grain by November on account of 
transportation problems. 40 Because such late shipments would inevitably 
undermine German negotiations for grain deliveries in 1941, Schnurre swiftly 
rejected this offer, 41 and no quick understanding was reached. 

Of course, the Germans also contributed their share of problems to the 
economic relationship. Trade dropped off slightly in July, 42 with the Germans 
remaining dangerously behind in their accounts under the February treaty. 43 The 
Russia Committee also warned that businesses producing goods for the Soviet 
Union were starting to lose skilled workers to the military and its efforts. 44 On the 
other hand, the Germans had overfulfilled their August 19 obligations, in contrast 
to the Soviets, who had met only half of their terms. 45 And the delays in fulfilling 
the February treaty were largely due to the arduous Soviet negotiating methods. 
Despite their failings, the Germans, as usual, seem to have had more to complain 
about in the economic partnership than the Russians. 

While Stalin played his familiar waiting game. Hitler groped around, 
apparently unsure of what to do next. The problem was England and its 
inexplicable failure to see reason and surrender. That left Hitler with three options 



Delivering the Goods 127 


to deal with the British: attack England directly (Operation Sea Lion), attack the 
empire, or attack its remaining potential allies (namely the Soviet Union). 46 Few 
in the German military seemed eager to take on the British navy in the Channel, 
so the services delayed while Gdring chewed up his Luftwaffe in viscious fighting 
against the RAF. 

Raeder and others were more eager to slash away at the flanks of the British 
lion, but this second option would take time, something the Germans might not 
have with the Soviet Union rearming, the United States leaning toward Great 
Britain, and the German economy struggling under the weight of increased 
industrial demand (particularly from France and the Low Countries) on an already 
shrinking raw-material base. As General Thomas and others had been warning all 
along, Germany could not survive a long war against major powers. 

Far from solving Germany’s raw-material problems, as many historians have 
assumed, 47 the booty from the new conquests provided only temporary relief and 
actually made the long-term situation much worse. The Reich was now cut off 
from much of its remaining overseas trade, a large part of which had come in via 
neutrals such as Italy and the Netherlands. As a result, German overseas exports 
plummeted from 222,100 tons in March to 7,600 tons in May. 48 Meanwhile, the 
conquered territories only added to the growing demand. Based on 1938 figures, 
Greater Germany and its sphere of influence lacked, among other items, 500,000 
tons of manganese, 3.3 million tons of raw phosphate, 200,000 tons of rubber, and 
9.5 million tons of oil! 49 Conservation and synthetics could make up only some of 
the difference. 50 The logical choice to take up the rest of this slack was the USSR, 
but it remained unwilling and increasingly unable (what with its own military 
buildup) to provide the enormous amounts required by the Germans. 51 

That left a third option, an attack on the Soviet Union, the strategy Hitler, for 
ideological reasons, preferred anyway. Hitler believed that demolishing the 
Bolshevik state “would be like a child’s game in a sandbox” 52 and would 
essentially solve his remaining strategic and economic problems. Germany would 
secure the raw materials it wanted so badly but was increasingly unlikely to get 
through trade. Japan would be encouraged to attack the United States. And 
England would be left completely isolated; it would be forced to surrender. 

Even before Germany’s increasing difficulties with England in July and 
August, Hitler and other German leaders appear to have seen this logic and begun 
moving toward a decision to attack the USSR. Although there is some question 
about the date, Hitler reportedly told Lt. General von Sodenstem on June 2 that the 
victories against the Allies “finally freed his hands for his important real task: the 
showdown with Bolshevism.” 53 Within two weeks Hitler ordered the army to begin 
reorganizing, perhaps, as some have suggested, because a somewhat smaller but 
harder-hitting instrument would be better geared to fight a great mobile campaign 
in the east while the navy and air force handled the short-term English problem. 54 
At approximately the same time, but on his own initiative, Chief of Staff Haider 
started planning and restructuring for “a vigorous defense” of the east. 55 

Haider intensified his efforts in July after hearing from Weizsacker that 



128 Feeding the German Eagle 


Hitler, too, was looking eastward. 56 So far, however, the military was considering 
only a quick strike designed to intimidate and not a full-fledged campaign 
designed to conquer. 57 Haider himself would argue later in the month that “we 
should keep on friendly terms with Russia.” 58 Nonetheless, by the twenty-first 
planning had gone far enough that Army Commander-in-Chief Brauchitsch would 
propose a major action against the USSR in the fall. Hitler readily agreed. 59 

Since some of these preparations for an eastern offensive were obviously a 
response to strategic concerns that the Soviets remained an unreliable source of 
vital raw materials and a major threat to other resources such as Rumania’s oil, 60 
historians have asked whether a more conciliatory policy on trade relations could 
have delayed the German decision to invade. McSherry, for one, argues that 
Hitler’s decision to attack came rather late and as a result of Soviet intransigence. 
Therefore, a policy of economic and political appeasement “could probably have 
delayed the attack on the Soviet Union for at least a year.” 61 

This author is unconvinced. None of the earlier attempts to appease Hitler had 
diverted his blows—just the opposite. Especially in the case of the outwardly weak 
USSR, Hitler seemed bent on conquering his Lebensraum the first chance he got. 
Germany needed the resources to fight her war in the short term and the land to 
build her empire in the long term. And now was the time, or at least so the Fiihrer 
apparently believed. 

Many in the military appear to have reached similar conclusions. A few in 
the military may have been convinced to invade by the difficult economic 
negotiations, but such concerns were by no means decisive. During the preceding 
year, practically every major study on the subject had argued that Soviet economic 
aid could be significant, perhaps even vital, but not overwhelming. Even if Stalin 
had wanted to appease Germany, he could never have supplied enough raw 
materials to cover all the holes in the German war economy. Having already 
approached the limits of their “total war of improvisation,” even the most cautious 
military leaders had to look toward an invasion of the Soviet Union to help 
alleviate their resource demands. Besides, the Germans assumed they would have 
an easy time of it against a foe who could barely handle the Finns. 

STALIN TURNS WEST, AUGUST 6 

Given the thinking of Germany’s military leaders, it should come as no 
surprise that Hitler’s planned eastern campaign found only limited opposition, 
especially once the proposed 1940 invasion was pushed back to 1941. By the 
twenty-eighth the military had agreed to rebuild the German army to 180 divisions 
before next May; 62 by the twenty-ninth Jodi had informed his staff of Hitler’s 
intention to attack; 63 and by the thirty-first Hitler had officially laid down his plan 
to crush the USSR in the spring of 1941. 64 Of course, this decision could still be 
overturned pending developments in the struggle with England, but Hitler’s 
preferred strategy was clear. 65 

At the same time that Germany was secretly shifting its gaze eastward, Stalin 



Delivering the Goods 129 


continued his very public moves westward. As July ended Molotov informed 
Schulenburg that Germany’s future economic relations with the Baltics would be 
redirected to Moscow, though he again promised to safeguard German property 
interests. 66 During the next week the Baltics were officially incorporated into the 
USSR. After a few breathless moments in June and July, Stalin now appeared to 
have regained his confidence that Germany was still too enmeshed in the west and 
too dependent on Soviet resources and good will to wage war in the east. 67 

While these political positions were hardening, the stream of goods from the 
Soviet Union to Germany continued to flow through the prescribed channels, 
jumping from 26.6 million RM in July to 67.6 million RM in August. 68 Schnurre 
in particular seemed pleased with these figures, arguing that “German-Soviet trade 
has developed altogether quite satisfactorily since conclusion of the new basic 
agreements.” He further contended “that especially in the past two months the 
Soviet Government has made considerable efforts in transportation and production 
to accomplish deliveries of raw materials [grain, petroleum, cotton, mine timber, 
and metals] urgently needed by us.” 69 

Even Schnurre, however, admitted that there were still problems plaguing the 
economic relationship. Trade was already reaching the limits of what the 
transportation networks could carry, though some still hoped that inland 
waterways might be able to ease the load. 70 Even more troublesome was the 
growing trade imbalance in the February 11 clearing accounts, “primarily due to 
the very difficult negotiation procedure and the general slowness of the Russian 
agents.” 71 

Recent examples of such Soviet methods included a series of demands levied 
on Krupp after contracts had already been signed to supply the Widia Process for 
steel-hardening. Only following considerable government pressure did Krupp 
agree to stay in the negotiations. 72 Krupp officials explained to the Soviets that the 
firm’s licensing fees were only 4 percent in contrast to the Americans at 30 
percent, but the delays and price demands continued. 73 The Soviets also held tough 
on compensation for the assets of the Bessarabian Volksdeutsche. All property was 
confiscated, and these ethnic Germans were allowed to keep only those belongings 
they could physically carry with them out of the country. 74 

Nonetheless, despite Soviet responsibility for most of the growing German 
deficit under the February treaty terms and a huge Soviet shortfall under the 
provisions of August 19, Schnurre feared that the current overall imbalance might 
jeopardize future negotiations and deliveries. He was right. 

NOTES 

1. For another example of the reluctance of German businesses to “give away” 
their technology to the Soviets, see HA Krupp/Werksarchiv/Dr. Janssen, “Besprechungen 
mit Regierungsrat Mussfeld (16.5.40),” WAVIIf1404 1, 1-2. 

2. Although having already reached a 25 million RM agreement with Otto Wolff 
for the Wesseling synthetic fuel plant on May 14 and shown themselves interested in 
similar projects, the Soviets now began backing out of further discussions on synthetic- 



130 Feeding the German Eagle 


material facilities. See RWW/Otto Wolff/RuBland, “Gasper Letters (14.5.40 & 30.5.40),” 
72-41-5. 

3. Soviet exports to Germany rose from 21.1 million RM to 67.6 million RM 
during this period (Appendix A, Table 1.5). 

4. BAMA, RH 2/2932, 125. 

5. Rolf-Dieter Muller, “Von der Wirtschaflsallianz zum kolonialen 
Ausbeutungslaieg,” inDer Angriff auf die Sowuetunion, vol. 4 of Das Deutsche Reich und 
der Zweite Weltkrieg (Stuttgart: Deutsche Verlags-Anstalt, 1983), 107-8. 

6. DGFP, D, 9: 476-77, doc. 354, and 496-501, doc. 367. 

7. USSBS, Oil, Final Report, 25b, estimates that 745,000 tons were confiscated. 
Other figures put the total as high as 1.5 million tons. 

8. Beloff, 2: 324. 

9. USSBS, Rubber, 41. 

10. Instead of allowing the Soviets free rein as they had done before, the Germans 
came to the aid of Finland. The Soviets were clearly unhappy about the changed German 
attitude in Scandinavia, but a compromise settlement was worked out whereby the Finns 
promised 60 percent of then Petsamo nickel to Germany and 40 percent to the USSR. For 
the whole issue of Soviet-German competition in Finland during the summer of 1940, see 
Gerd Ueberschar, “Die Einbeziehung Skandinaviens in die Planung ‘Barbarossa,’” in Der 
Angriff auf die Sowjetunion, vol. 4 of Das Deutsche Reich und der Zweite Weltkrieg 
(Stuttgart: Deutsche Verlags-Anstalt, 1983), 371-74. 

11. While German firms had to pay in advance for Soviet goods, the Soviets did not 
have to pay until they received their shipments, in other words, about thirty to forty days 
later than their German counterparts. See BA/RFM, “Ubersichten tiber den deutsch- 
russischen Waren- und Zahlungsverkehr,” R 2/17307, 2. 

12. BAMA, RW19/244, 156. Lt. Col. Drews and other German officials, however, 
described the Russian deliveries to Germany as “unsatisfactory,” especially shipments of 
promised metals. 

13. NC&A, 6: 984. Emphasis is in original. 

14. See Appendix A, Table 4.2. 

15. BAMA, RIF 19/244, 155-56. 

16. Eichler, 141, and Appendix A, Table 5.3. 

17. HA Krupp/Werksarchiv, “Betrifft: Steuerliche Behandlung des Erloses aus dem 
Verkauf von Erfahrungen nach RuBland (3.6.40),” WA VIIf 1445, 1-5. 

18. BA/RFM, “Niederschrift tiber die Sitzung des Interministeriellen Ausschusses 
vom 7. Juni 1940,” R 2/17315, 1-3. See also BAMA, RW 19/244, 165. 

19. DGFP, D, 9: 115, doc. 103, and BAAP/RWM, “Aufbau der europaischen 
Wirtschaft nach dem Kriege: Rohstoffversorgung der GroBraumwirtschaft 1940-1942,” R 
7/592. 

20. PA, R 106232, 453181. 

21. See, for example, Schnurre’s June 13 complaint about Soviet failure to unload 
German coal freighters waiting in Leningrad (PA, R 106232, E041822). 

22. IfW/RA, “Rundschreiben (22.6.40) ” YY2389, 1. 

23. BAMA, RW 19/244, 171. 

24. NSR, 15 3. In addition to this annual trade, the WiRiiAmt estimated that Germans 
held 200 million RM of investment capital in the Baltic states (BAMA, RW 19/244, 
184-85). 

25. PA, R 106232, E041825. 



Delivering the Goods 131 


26. Appendix A, Tables 1.7 and 1.8. 

27. Louis Rotundo, “Stalin and the Outbreak of War in 1941,” Journal of 
Contemporary History 24 (1989): 280. 

28. Dallin, Foreign Policy, 235-36. 

29. NSR, 158. 

30. NSR, 163. 

31. BAMA, RW4/V.308, 155. 

32. Appendix A, Tables 1.5 and 1.6. 

33. PA, R 106232, 453190-96. 

34. DGFP, D, 10:201, doc. 162. See also Bronis J. Kaslas, “The Lithuanian Strip 
in Soviet-German Secret Diplomacy, 1939—41 Journal of Baltic Studies 4, no. 3 (1973): 
218. 

35. BAMA, RW 19/244, 190. 

36. Eichler, 156. 

37. BAMA, RW 19/244, 190, and PA, R 106232, E041833. 

38. PA, R 106232, E041837. 

39. PA, R 106232, E041848. 

40. PA, R 106232, E041840. 

41. PA, R 106232, E041843^14. 

42. Appendix A, Table 1.6. 

43. Appendix A, Table 1.7. Molotov noted the discrepancy during his July 16 
meeting with Schulenburg (PA, R 106232, E041840). 

44. IfW/RA, “Rundschreiben (11.7.40),” YY2389, 1. 

45. Appendix A, Tables 1.7 and 1.8. 

46. Noakes and Pridham, 2: 791-93. 

47. See Philbin, 115, for an example. 

48. Appendix A, Table 4.2. 

49. BA/SR/RfwP, “Die Mangelstoffe des mitteleuropaisch-groBdeutschen 
Wirtschaftsraumes (Juni 1940),” R 24/24, 154-73. These conclusions were reinforced by 
a series of later reports. See, for instance, BA/SR/RfwP, “Rohstoffversorgung des mittel¬ 
europaisch-groBdeutschen Wirtschaftsraumes (Juli 1940),” R 24/24\ and 
BAMA/OKWAViRuAmt/Ro/Dr. Friedensburg, “Die deutsche Roh- und Treibstofflage 
1939-1940,” Wi/IF5.2199. 

50. They did, nonetheless, impose tight restrictions whenever possible. The oil 
allotment to the Benelux countries, for example, was slashed from 200,000 to 60,000 
barrels a day, barely enough for industries to stay open (Goralski and Freeburg, 63). 

51. For the Ministry of Economic Warfare evaluation supporting this argument, see 
Medlicott, 1: 419-21. For German military thinking on this question, see Muller, 
Wirtschaftsallianz, 111-13. 

52. Albert Speer, Inside the Third Reich (New York: Avon, 1971), 238. 

53. See Jurgen Forster’s analysis in “Ftinfzig Jahre danach: Ein historischer 
Ruckblick auf das ‘Untemehmen Barbarossa,’” Aus Politik und Zeitgeschichte, 7 June 
1991,13. 

54. Thomas, 406-7, and Leach, German Strategy, 49-50. 

55. Leach, German Strategy, 112. 

56. Leach, German Strategy, 112. 



132 Feeding the German Eagle 


57. See, for example, Robert Cecil, who downplays these early army preparations 
and emphasizes Hitler as the driving force behind the more extensive campaign plans 
(Cecil, 83-84). 

58. Haider, 240-41. 

59. Haider, 231-32. 

60. See Norman Rich, Hitler’s War Aims: Ideology, the Nazi State and the Course 
of Expansion (New York: Norton, 1973), 206-7, for a discussion of the Soviet threat to 
Germany’s war economy. 

61. McSherry, 2: 248. 

62. Forster, Funfzig Jahre danach, 15. 

63. NC&A, 5: 741. 

64. Haider, 244^15. 

65. For the original version of this now widely accepted view, see Weinberg, 
Germany and the Soviet Union, 114-16. For a more recent rebuttal to this argument, see 
H.W. Koch, “Operation Barbarossa—The Current State of the Debate,” The Historical 
Journal, 31, no. 2 (June 1988): 377-90. 

66. DGFP, D, 10: 350, doc. 251. 

67. This, at least, was the story high-level Soviets were circulating at the beginning 
of August. See BA, NS 43/37, 215-19. 

6 8. Appendix A, Table 1.5. 

69. DGFP, D, 10: 270, doc. 206. 

70. Institut ftir Konjunkturforschung, “Die Bedeutung des Bug-Dnj epr-Kanals,” Die 
Wirtschaft der UdSSR 3 (March 1941): 4. 

71. DGFP, D, 10: 270, doc. 206. Schnurre later chided the military and business 
leaders for being partly to blame for the delays in German counterdeliveries (BAMA, RW 
19/244, 198). 

72. HA KruppAVerksarchiv, “Letter to Oberregierungsrat Dr. Liptau, Finanzaint 
Essen-Nord (25.7.40),” WA VIIf1445, 1-2. 

73. HA KruppAVerksarchiv, “Memorandum der UdSSR tiber Preise fur deutsche 
Kriegsgerat-Lieferungen (15.8.40),” WA VIIf 1445, 1-2. 

74. BAMA, RH 2/2932, 156. 



Chapter 11 


New Problems Addressed 


With Stalin turning west and Hitler east and with both fairly confident that they 
held the better cards, a clash of interests was inevitable. Sure enough, the fall of 
1940 would see a series of disputes between the two sides over territorial and 
economic questions. In the troubled trade relationship, the parties added a whole 
list of new issues to bicker over: trade balances, the Lithuanian strip, 
compensation for lost property, trade with conquered territories, and treaty terms 
for the second year of the February agreement. In all cases the traditional pattern 
continued. The Germans pushed for a quick settlement on their terms but had to 
relent when the Soviets turned up the pressure. Only this time, the Germans 
responded with more than just contracts and deliveries; they retaliated with war 
plans and military preparations. 


THE DELICATE BALANCE, SEPTEMBER 12 

Despite the relatively quiet summer of economic deliveries and mostly correct 
economic behavior and despite the continuing outward appearance of cooperation 
as exemplified by Soviet participation in the Konigsberg and Leipzig trade shows 1 
and the opening of new consulates in both countries, 2 the tension in German- 
Soviet trade negotiations began building once again. The first major issue on the 
table and the one that would almost destroy the economic relationship was, as 
Schnurre had feared, the growing German trade deficit under the February accord. 
The Germans examined the issue at an inter-agency meeting on August 8. For the 
same reasons presented earlier by Schnurre and Ritter, Ter-Nedden argued that 
“the German delivery deficit is due not to any fault on the German side, but goes 
back exclusively to the behavior of the Soviet side.” 3 In particular, he explained 



134 Feeding the German Eagle 

that Soviet delays and cancellations of long-term projects accounted already for 
roughly 100 million RM, much more than the current imbalance. 

Further evidence of German good will could be found in the execution of the 
August 19 treaty. By the end of August, when the half-way point of the two-year 
arrangement had been reached, the Germans had already fulfilled 55 percent of 
the trade terms in contrast to the Soviets at only 31.2 percent of their trade 
requirements. Unsurprisingly, the Soviets were taking even greater advantage of 
the credit arrangements of the August 19 treaty. After one year the USSR had 
already used up 76.1 percent of its allotted total for which final repayment was not 
due for seven years. 4 But Stalin ignored these statistics and started pressing the 
Germans on their February treaty deficit. 

Trade balances, however, were far from the only issue plaguing the 
partnership. While the Soviets were incorporating the Baltics, the Germans 
brought up the still unresolved issue of the Lithuanian Strip and asked for a quid 
pro quo. By the twelfth the Soviets had offered $3.86 million in gold or raw 
materials over two years. 5 To show they were serious, they then strengthened their 
occupation forces in the Strip on the twentieth. In response, the Germans upped 
the ante and asked for 54 million RM ($13 million) or 2.5 million tons of grain on 
the grounds that similar land in Prussia would cost 254 million RM. 6 The Soviets, 
in turn, demanded greater access to the port of Memel, 7 a move that the Germans 
forestalled by increasing their own militaiy forces in the region. Trying to put an 
end to this escalating game of tit-for-tat, Ribbentrop met with Skvartsev on 
September 2. Despite the resulting German agreement on the tenth to sell the land, 
however, the two sides still remained far apart on prices. 8 

How to handle the occupied territories also proved perplexing, especially since 
the Germans had in the past been able to blackmail Eastern European states into 
economic terms favoring the Reich. Now these states were dominated by the 
USSR, and the Germans would have to pay Soviet prices for these same goods. In 
the case of the Baltics, Molotov proposed a bilateral commission to arbitrate 
property questions. 9 But Schnurre was concerned that such an arrangement would 
lead to interminable delays and he requested to have this issue separated from the 
rest of his economic negotiations. 10 Nonetheless, the Germans did press ahead with 
resettling many of the Volksdeutsche who still lived in the region. 11 

In the case of Bessarabia, the Germans wanted at least 100,000 tons of the 
grain for which they had previously contracted, they wanted German property 
guaranteed, and they wanted the train tracks left alone to facilitate German oil 
shipments. Molotov stalled on the first, 12 proposed another bilateral commission 
to handle the second, 13 and on the third promised not to broaden the rail line. 14 By 
the twenty-third, however, Schnurre was already complaining about stoppages due 
to Soviet renailing. 15 It was Poland all over again. 

While the German negotiators talked, the Battle of Britain turned against the 
Reich. With the English option closed, the German military intensified its 
planning for an eastern campaign, despite some early warning signs that the 
invasion of Russia might not be the economic boon for which many were hoping. 16 



New Problems Addressed 135 


The Germans vetoed a proposed Soviet-Italian understanding, 17 started building 
up their forces in Poland (Aujbau Ost ), organized camouflage operations, sent 
troops to Finland, and tunneled more forces into Rumania. 18 

Economic preparations were also under way as the Germans strove to build 
up a 180-division army. Of course, with more equipment going to the military, 
there would be even less to send to the USSR. Thus Goring informed Thomas on 
August 14 “that the Fuehrer desired punctual delivery to the Russians only till 
spring 1941. Later on we would have no further interest in completely satisfying 
the Russian demands.” 19 The Germans were confident indeed. They were not 
confident enough, however, to let the Foreign Ministry officially in on the plan, 
though it does appear that Ribbentrop and company had a pretty good idea of what 
was in store. 20 

Further economic measures included the reauthorization of construction on 
a third synthetic-rubber plant. 21 Since the cancellation of the earlier plans had been 
justified at the time by the availability of rubber via the Soviet Union, new 
preparations for expanded domestic production meant that German officials no 
longer counted on Trans-Siberian shipments. 

Of course, these measures and the increasingly inflexible policy behind them 
helped escalate tensions in Eastern Europe and undermine the Foreign Ministry 
and Russia Committee policy of closer relations with the USSR. 22 The growing 
problems in the economic relationship came to a head when Schnurre, Ter- 
Nedden, and company left for Moscow on August 24 to start talks about trade 
deficits and economic arrangements in the occupied territories. 23 

Negotiations on the latter issue made only limited progress. An agreement 
allowing the 125,000 Volksdeutsche in Bessarabia and Bukovina to resettle under 
terms similar to those in the earlier Baltic treaty was reached on September 5, 24 but 
the other issues remained unresolved. Ribbentrop even cabled Schnurre that he 
should bypass the issue of compensation for the Lithuanian Strip so that the 
subject could be handled separately and at a later time. 25 

More important, Schnurre’s conversations with Mikoyan on the trade deficit, 
despite some initial optimism and cordiality, were going nowhere. 26 The two sides 
could not even agree on the numbers, the Soviets claiming that the Germans owed 
73 million RM under the terms of the February treaty and the Germans admitting 
at most to a 60 million RM debt. Schnurre blamed the Soviets for the deficit; 
Mikoyan blamed the Germans. Schnurre proposed that the Soviets reinstate their 
orders for major projects and other items; Mikoyan threatened to cut back Soviet 
shipments to Germany until the accounts balanced. 27 In fact, oil shipments had 
already dropped during the first two weeks of September. 28 When a second round 
of talks also resulted in deadlock, 29 the Soviets began turning off the spigot. Stalin 
obviously meant business. 

RIDING THE RAILS, OCTOBER 1 

While Schnurre returned to Berlin and the Germans examined the Soviet 
demands, 30 Stalin continued to use the trade imbalance as economic leverage. 31 



136 Feeding the German Eagle 

Overall trade began falling off, and oil shipments in particular slowed 
dramatically from 104,100 tons in August to 51,100 tons in September. 32 Soon the 
Germans were complaining that the Soviets were holding up both rail and naval 
shipments. The USSR had closed down the Baltic route; previous orders had been 
delayed in Batum and Constanza; and no new shipments had been sent for almost 
two weeks. 33 

The Soviets also tightened the screws in other parts of their trade relationship. 
They halted shipments from Manchuria, for example, claiming that the plague had 
broken out in that region, an assertion no other country seemed able to verify. 34 
They also threatened to cancel German shale-oil contracts with Estonia because 
of the Reich’s growing deficit with that state. 35 

The economic balance of power in the trade partnership still clearly favored 
the Soviet Union. Despite its military successes, Germany’s overall import 
situation had continued to deteriorate, leaving Hitler with the option of scaling 
back his military buildup to boost trade with the USSR or conquering the eastern 
Lehensraum to loot and pillage it. 36 He, in part for ideological reasons, and the 
German military, mainly for strategic reasons, chose the latter. 

Growing doubts about Soviet ability or willingness to supply Germany with 
the raw materials necessary for a long war apparently strengthened the German 
resolve to attack come spring. Yet another WiRuAmt study on Soviet export 
capacity pointed to the USSR’s limited potential to meet German needs. The study 
did imply that the government could squeeze out substantial quantities given the 
necessary political will, but that such action would require a more cooperative and 
efficient regime than currently in power. 37 Although there were some dissenters, 38 
most German military leaders reached what appeared to be the obvious 
conclusion—conquer the country and establish a system that could extract the 
resources Germany needed. 

In the meantime, however, German preparations for war only exacerbated the 
already growing economic tensions. Changes in the German priority system put 
armaments once again above Russian deliveries as plans for the 180-division army 
were launched. 39 As a result, labor started to run short for Soviet export 
production. 40 

The Foreign Office tried to counter the trend toward armed conflict with the 
USSR by sharpening its argument in favor of a diplomatic settlement with the 
Soviet Union and renewed attacks against the British Empire. But these two halves 
of Ribbentrop’s proposed policy were frequently at odds with each other. The 
September 27 signing of the Tripartite Pact with Italy and Japan, for instance, may 
have threatened Great Britain and the United States, but it also appeared decidedly 
unfriendly toward the Soviet Union. 41 

While Ribbentrop was off trying to organize an anti-capitalist alliance, 
Schnurre was spearheading the assault on the proposed invasion schemes. Having 
sometimes discounted the overall contribution that the USSR could or would make 
to the German war economy and having often put the blame on the Soviet Union 
for the various problems in the negotiations, Schnurre had by now caught wind of 



New Problems Addressed 137 


the attack plans and was increasingly concerned that the growing anti-Soviet 
mood would jeopardize the laboriously constructed economic understanding. 
Schnurre therefore requested on September 26 that Hitler reinstate the top-level 
priority previously given to exports to the USSR. Without such a decision, 
Schnurre warned, “it will be impossible to balance the considerable deficit already 
existing in German deliveries. On the contrary, a further great lag in German 
deliveries must be expected.” 42 

Schnurre extended his analysis in an even longer memorandum on the twenty- 
eighth. After reviewing the recent history of the negotiations and explaining the 
problem posed by the new armaments priorities, Schnurre argued that “supplies 
from the Russians have heretofore been a very substantial prop to the German war 
economy” and that a cutoff would severely damage the Reich. 43 

What signs of hope there were for the economic relationship remained limited 
and contradictory. The Soviets, for example, did continue to show some interest 
in small-scale synthetic-material plants, 44 but they also formally announced their 
already months-old policy of rejecting all long-term projects. 45 Work on the ex- 
Liitzow, now renamed Petropavlovsk, progressed according to plan, but the Soviets 
still protested repeatedly about training schedules and other technical details. 46 

More important, the two sides did sign a series of new transit treaties on 
October 1 to replace the temporary agreements from the previous December. 47 
Even here, however, the road had not been smooth. The Soviet delegation dealing 
with rail negotiations had left for Berlin on August 20, bringing with them a two- 
hundred-page proposal! As always, the Germans were soon complaining that the 
Soviets were reserved and mistrustful and that the negotiations were moving 
slowly. 48 A whole host of problems came up: the route for the Berlin-Moscow rail 
link, reloading at border stations, the forming of a general transit commission, 
Soviet bureaucratic obstruction and incompetence, and the renailing of rail lines 
in Bessarabia. 49 Nevertheless, after the usual rounds of bickering, the Germans 
eventually agreed to most of the Soviet demands, and the deal was done. 

ONCE MORE INTO THE BREECH, OCTOBER 28 

Just as in the previous year’s negotiations, however, the signing of a transit 
treaty was a prelude not to friendly discussions but to long and difficult 
bargaining. Also familiar was the gradual evolution of German economic policy 
to fit Soviet demands as the Germans realized that their still extensive reliance on 
Soviet shipments required that they compromise with the USSR. 50 But not 
everyone in Germany was so convinced. In fact, the leadership remained split 
between those pushing for an invasion and those arguing for closer relations with 
the USSR. 

While the Germans waffled, the Soviets kept the economic pressure on. 
Overall Soviet exports to the Reich, for example, had dropped from a high of 94.6 
million RM to 28 million RM in November, 51 and German complaints about oil 
shipments 52 and transit trade 53 continued unabated. The Soviets also delayed their 



138 Feeding the German Eagle 

final approval of the train treaties for more than two weeks 54 and quickly lost 
interest in the initially promising talks about small synthetic-fuel plants. 55 

At the same time, the Russians continued their nationalization of the occupied 
territories 56 and began digging in their heels on questions of compensation for 
Volksdeutsche property. Instead of allowing for the foil indemnification that the 
Germans had expected, the USSR suddenly imposed greater restrictions on the 
amounts and kinds of wealth that could be taken out of the country 57 and 
drastically limited the totals that the USSR would apply toward the Reich’s 
clearing accounts. 58 

The Foreign Ministry and its allies in the Economics Ministry and the Navy 
used the continuing economic difficulties to press for closer relations with the 
Soviet Union. On October 4, while Hitler was off entertaining Mussolini at the 
Brenner Pass, Goring met with various high-ranking officials to sort out German 
policy. Stalin had effectively vetoed the August plan to raise the priority of 
military production above that of Soviet exports. But Thomas and Admiral Witzell 
continued to argue against Schnurre’s scheme to reinstate the old priority system. 
Goring compromised between the two positions and included some but not all of 
the Soviet items in the highest (la) priority ranking. 59 After referring this decision 
to Hitler, Goring implemented his new strategy by mid-month. 60 

Having achieved at least a change in German tactics if not yet a change in 
overall strategy, the opponents of a war against the Soviet Union continued to 
make their case against the proposed invasion. In his October 14 meeting with 
Hitler, for example, Raeder argued that the USSR “will not attempt to attack in the 
next few years, since she is at present building up her Navy with the assistance of 
Germany.” 61 Not only would the Soviet Union not attack, but members of the 
Moscow Embassy tried to convince Haider that a German-initiated war in the east 
could not be won quickly and that the resulting occupation of Western Russia 
would create “more of a drain than a relief for Germany’s economic situation.” 62 

If the Soviet Union was not a short-term threat and if an invasion would only 
hurt Germany, why not work for closer relations? Thinking along these lines, 
Ribbentrop invited Molotov to visit Berlin with the prospect of forming a grand 
alliance against the Anglo-Saxon powers. 63 Although not necessarily agreeing to 
Ribbentrop’s proposed agenda, Stalin did assent to Molotov's venture outside the 
confines of Mother Russia. 64 

Now that Hitler had tentatively agreed to meet Soviet economic demands and 
Molotov had agreed to travel to Berlin, Schnurre was free to return to Moscow and 
continue the economic talks. Ritter had requested on October 5, 65 the Soviets had 
accepted on October 7, 66 and the Germans had reconfirmed on October 10 67 plans 
for Schnurre to fly to the Soviet capital in the next few days. But the Germans had 
apparently needed more time to resolve their differences, and only on the twenty- 
eighth did Schnurre, accompanied by fifteen other delegates, 68 depart for what the 
Germans feared would be a chilly reception in a snow-covered Moscow. 69 



New Problems Addressed 139 


NOTES 

1. See Hans Jonas, “Die Transit-Aufgaben der Deutschen Ostmesse, Ost-Europa- 
Markt, Jul/Aug 1940, 161-67; and “Die 28. Deutsche Ostmesse—Die UdSSR auf der 
Ostmesse und der Leipziger Herbstmesse Die Ostwirtschaft, August 1940, 88-89. 

2. Eichler, 156. 

3. BA/RFM, “Niederschrift iiber die Sitzung des Interministeriellen Ausschusses 
vom 8.8.40,”R 2/17315, 2. 

4. BA/RFM, “Niederschrift (8.8.40),” R 2/17315, 2-5. For the specific figures, see 
Appendix A, Tables 1.7 and 1.8. 

5. PA/HaPol/Clodius, “Abtretung litauischen Gebietsstreifens (12.8.40),” R 
106001. See also NSR, 176, where Schulenburg notes that the Soviets had apparently 
derived this figure by taking half of what the Russians had received from the United States 
for Alaska. 

6. PA/HaPol/Clodius, “Ribbentrop Telegram (31.8.40),” R 106001, 3. 

7. PA, Fach 65, 3: 357796-97 & 357802-3. 

8. For a more detailed discussion of these events, see Kaslas, 219-20. 

9. PA/HaPol/Clodius, “Deutsche Interessen in den Baltenstaaten (8.8.40),” R 
106001. 

10. PA/HaPol/Clodius, “Schnurre Letter (9.8.40),” R 106001. 

11. DGFP, D, 10: 551-52, doc. 398. 

12. PA, R 106232, E041856. 

13. PA, R 106232, E041858. 

14. PA, R 106232, E041872. 

15. PA, R 106232, E041882. 

16. Muller, Wirtschaftsallianz, 114. 

17. Weinberg, Germany and the Soviet Union, 96. 

18. For these and other German moves in August, see Weinberg, Germany and the 
Soviet Union, 125-34. 

19. NC&A, 4:1082. 

20. See, for example, Schnurre’s meetings with Goring in September and October 
where the Field Marshall reassured Schnurre of his support for closer economic relations 
with the USSR but requested that Schnurre delay further negotiations because of the 
political climate. For a more detailed description of these events, see PA/Schnurre, Leben, 
103-5, and PA, R 106232, E041944. 

21. USSBS, Oil, Final Report, 49. 

22. Weinberg, Germany and the Soviet Union, 172. 

23. See the notice in Ostwirtschaft, August 1940, 87. The Germans had apparently 
asked for and received a postponement until August 28 but must have changed their minds 
(PA, R 106232, E041873). 

24. PA/HaPol/Schnurre, “Vereinbarung . . . iiber die Umsiedlung der 

deutschstammigen Bevolkerung aus den Gebieten von Bessarabien und der Nordlichen 
Bukowina in das Deutsche Reich (5.9.40),” R 105315, 1-43. The remaining property was 
to be estimated by a German-Soviet commission and made good from Soviet clearing 
accounts over the next ten years (BAMA, RW 45/14, 3: 118-19). 

25. PA, R 106232, E041883. 

26. PA, R 106232, 453222. 

27. PA, R 106232, E041886-87. 

28. PA, R 106232, E041909, and BAMA, RW 19/338, 56 & 76. 



140 Feeding the German Eagle 


29. PA, R 106232 , 453227—41. 

30. PA/DR, “UdSSR 1939-1941 ” R 27168, 25908, and BAMA, RW19/244 ,260. 

31. Ter-Nedden, Drews and most of the German leadership continued to blame the 
Soviets for most of the difficulties (BAMA, RW 19/244, 260, and BAMA, RW 45/14, 3: 
107-8), but Kostring decided that some fault also lay with German officials for 
overestimating the Reich’s potential to supply the Soviet Union (BAMA, KH 2/2932 , 
169-70). 

32. Appendix A, Table 3.1. 

33. BAMA, RW 19/2814, J005945; BAMA, RW 19/2715, J015252-54; and 
BAAP/BM, “Wiehl Telegram (12.9.40),” 09.02/308. 

34. BAMA, RW 19/244, 248^19. 

35. PA/HaPol/Clodius,“TippelskirchTelegram(23.9.40),”R 106001. TheGermans 
responded that German-Estonian trade was based on 3 to 6 month credits and would 
automatically right itself (PA/HaPol/Clodius, “Behr Telegram [27.9.40],” R 106001). 

36. Hans-Erich Volkmann, “N-S Aussenhandel im ‘geschlossenen’ 
Kriegswirtschaftsraum 1939-1941,” in Wirtschaft undRustung 1939-1945, eds. Friedrich 
Forstmeier and Flans-Erich Volkmann (Diisseldorf: Droste, 1977), 100. 

37. BAMA/OKWAViRuAmt/Geheim/Institut ftir Konjunkturforschung, 
“Ausfuhrmdglichkeiten filr die Erzeugnisse des sowjetrussischen Bergbaus (Sept. 1940),” 
RW 19/Anhang I/l 135, 33-35. As with earlier studies of this nature, the results were based 
on data from 1938, making these and future conclusions somewhat questionable. As the 
more optimistic members of the Russia Committee had been arguing, since the purges had 
artificially reduced Soviet economic performance from 1936 to 1938, there was a chance 
that the USSR’s economy could now handle more and not less trade. But this was pure 
speculation, and the growing Soviet military buildup had probably swallowed up the excess 
production and then some. 

38. Miiller, Wirtschaftsallianz, 115-17. 

39. BAMA, RW 19/205, 24, and Zeidler, 103. 

40. BAMA, RW 19/244, 262 & 273. 

41. Weinberg, Germany and the Soviet Union, 135-36. 

42. NSR, 197. 

43. NSR, 201. 

44. RWW/Otto Wolff/RuBland, “Aktenvermerk (18.9.40),” 72-41-5. 

45. NSR, 201. 

46. Philbin, 122-23. 

47. For the 126-page text of the treaty, see BA/RfEuL/RfF, “Deutsch-Sowjetisches 
Eisenbahn- und Grenzabkommen,” R 15/V/120. 

48. PA, R 106232, E041889-90 & E041918-19, and PA/HaPol/Clodius, “Hecking 
Telegram (20.8.40),” R 106001. 

49. PA, R 1 06232, E041889-90, and BA/RfEuL/RfG, “Letter to AA (31.8.40),” R 
15/VII/46, and BAMA, RW4/v.308, 179-80. 

50. As a result of growing demand from the military, Italy, and the occupied 
territories, and lower-than-expected production of synthetics, rubber was now added to the 
list of materials such as grain, oil, and manganese for which the Germans were increasingly 
reliant on Soviet deliveries (BAMA, RW 19/164, 80, and BAMA, RW 19/205, 18-19). 

51. Appendix A, Table 1.5. 

52. BAMA, RW 19/2814, J005949-51, and BAMA, RW 19/338, 88. Notethatan 
earthquake in Rumania had added to the backlog in Constanza. 



New Problems Addressed 141 


53. PA, R 106232, E041937 & E041940. An October 4 WiRuAmt meeting 
mentioned that Italy too now wanted access to this tenuous Trans-Siberian route to 
compensate for trade lost after its entry into the war (BAMA, RW19/244, 289). 

54. PA, R 106232, E041945. 

55. RWW/Otto Wolff/RuBland, “Siedersleben Letter (12.10.40); Martin Letter 
(31.10.40); and Olpe Aktennotiz (1.12.40),” 72-41-5. 

56. IfW/RA, “Rundschreiben (3.10.40),” YY2389. 

57. PA, R 106232, 453268 & E041946-A7. 

58. DGFP, D, 11: 278, doc. 168, and 11: 336-37, doc. 202. 

59. BAMA, RW 19/176, 109-11. 

60. BAMA, RW 19/164, 80, and BAMA, RW 19/244, 306-9. 

61. FCNA, 153. 

62. PA/Etzdorf, “Walter Letter (10.10.40),” R 27334. For an analysis of this letter 
and its meaning for the internal German debates over Operation Barbarossa, see Robert J. 
Gibbons, “Opposition gegen ‘Barbarossa’ im Herbst 1940. Eine Denkschrift aus der 
Deutschen Botschaft in Moskau,” Vierteljahrsheftfur Zeitgeschichte 23 (1975): 332-40. 

63. NSR, 213. 

64. NSR, 216. 

65. PA, R 106232, E041929. 

66. PA, R 106232, 453264. 

67. DGFP, D, 11: 279-80, doc. 170. 

68. PA/HaPol/Clodius, “Walter Telegram (28.10.40),” R 106001. 

69. BAMA, RW45/14, 3:58. 



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Chapter 12 


The Final Plan: Part II 


With Schnurre’s arrival in Russia, the elaborate negotiations to balance the 1940 
economic treaty and sign the 1941 economic treaty began in earnest. Though less 
difficult because less novel, this year ’ s bargaining process remained fairly arduous. 
The terms of the forthcoming treaty also remained more favorable to the Soviet 
Union. Even the delivery totals turned to the Soviet advantage as the naturally 
longer-term German contracts were completed and as Goring’s compromise policy 
was implemented. In fact, German shipments roughly equaled or surpassed Soviet 
deliveries from now until almost the beginning of Barbarossa. 1 And Germany’s 
fulfillment of the August 19 terms continued to outpace that of the Soviet Union. 2 

Despite these outward signs of German cooperation with Soviet plans and the 
Foreign Office’s continuing efforts to maintain normal relations. Hitler’s strategy 
remained decidedly anti-Soviet, and the German military continued its 
preparations for war. Far from enticing the Fiihrer into closer ties, the ongoing 
economic and political discussions with the USSR seem to have convinced Hitler 
that he must attack. 

MOLOTOV PAYS A VISIT, NOVEMBER 12-14 

The visit of Vyacheslav Molotov was a dramatic case in point. Designed by 
Ribbentrop to bring the sides closer together, it merely reconfirmed Hitler in his 
belief that he must attack the USSR as soon as possible. Coming in the second 
week of November, Molotov’s visit was preceded by two moderately successful 
weeks of economic negotiations in Moscow. Or, as Schnurre explained on the 
sixth, “things here are slow and difficult, but not unfavorable.” 3 

In this first phase, both sides seemed tentatively willing to compromise. 



144 Feeding the German Eagle 


Schnurre, Hilger, Schulenburg, and a few others were very eager to settle with the 
USSR, in part because this would strengthen their argument against Hitler’s anti- 
Soviet policy. According to Kostring, they appeared hopeful that “the negotiations 
will end in peace and friendship since Goring has placed the Russian supplies on 
the same level as the military’s supplies.” 4 With Molotov about to depart for 
Berlin, the Soviets too seemed to think an understanding was possible. 

Schnurre and the other fifteen delegates arrived in Moscow on October 30, 
were received cordially by Mikoyan, 5 and got right down to business. By the first 
of November, Schulenburg was already reporting that an economic arrangement 
concerning the nagging problem of Petsamo now seemed possible. 6 A compromise 
also appeared within reach on German deliveries of 38-cm turrets at 85 million 
RM with a 20 percent downpayment. 7 The Soviets even tentatively accepted a one¬ 
time German gold shipment to cover 20 million RM of the trade deficit. 8 

The two sides also moved closer to a settlement on Soviet grain shipments. 
The Germans hoped to receive 2.5 million tons, but Mikoyan would initially agree 
to only 1 million tons, though he did leave open the possibility of a further 1 
million tons later. 9 By the tenth the Soviets had also added an offer of 200,000 
tons of Bessarabian grain and 120,000 tons of oil seeds from both Bessarabia and 
the USSR. 10 

Although many historians have seen the German request for 2.5 million tons 
of grain as a dramatic increase and the Soviet efforts to meet this figure as 
economic appeasement, nothing of the sort had actually occurred. Germany’s 
arrangements for the past year had called for 1.1 million tons from the February 
treaty, 100,000 tons from the Baltic states, and 300,000 tons from Bessarabia—a 
total of 1.5 million tons. Whereas the first treaty had called for this 1.5 million 
tons to be shipped over twelve months, the new treaty would spread 2.5 million 
tons of grain deliveries over fifteen months. In short, the Germans were really 
asking for only some 40,000 tons extra a month, not a dramatic change given that 
earlier talks had already touched on the idea of larger grain shipments in Year 
Two (February 1941 through May 1942). And once the Year Two agreements 
were lengthened to eighteen months, German grain demands were now just 9 
percent higher than the respective Year One (February 1940 through January 
1941) totals. Nonetheless, the current Soviet offer of 1.2 million tons did represent 
some sort of progress. 

There were, on the other hand, the usual continuing problems. The plague in 
Manchuria turned out to be more real than imagined, but the continuing Soviet 
delays based on transportation difficulties proved exaggerated and were probably 
something of an excuse for throttling back on Soviet transit deliveries. 11 More 
important, the two sides remained far apart on questions about Volksdeutsche 
property, with the Germans continuing to demand full compensation and the 
Soviets refusing to discuss anything but partial reimbursement. 12 The Soviets even 
reduced the planned shipments from the Baltics to 50 million RM for the Year 
Two treaty, 13 down from the almost 150 million RM that had been shipped in the 
previous twelve months. 14 



The Final Plan: Part II 145 


The Soviets also had their fair share of German actions to criticize. In 
addition to the usual complaints about prices, 15 Mikoyan protested against 
Germany’s apparent willingness to sell military equipment to Finland but 
reluctance to sell similar items to the USSR. 16 The Soviets also raised questions 
about still unresolved plane contracts. 17 

Nevertheless, the mood in the economic negotiations remained somewhat 
upbeat 18 as many of the negotiators packed up and followed Molotov off to Berlin. 
Unfortunately for those hoping for closer ties between the two countries, the 
November 12-14 conference was a disaster. Hitler appeared interested only in 
hearing himself speak, Ribbentrop droned on endlessly about the virtues of a grand 
alliance, and Molotov ignored all of the fluffy German rhetoric in order to focus 
on an extensive Soviet list of complaints and demands. 19 Although Molotov had 
probably intended only to set out initial terms for future negotiations and although 
Ribbentrop would still try to follow up on these potential talks, this unlikely 
attempt to divert Hitler from his invasion plans had backfired miserably. 20 

What economic talks that did take place during Molotov’s visit also resolved 
nothing. During his conversation with Goring, the Foreign Commissar expressed 
his amazement that Germany, with all the resources of Europe at its disposal, 
could not fulfill the Soviet orders. Goring gave the usual reply, blaming the 
Soviets for their extensive demands in critical areas such as high-technology 
equipment and weapons. 21 The two countries’ respective positions having been 
restated, the only meeting dealing with economic issues broke up. 

Despite this lack of progress in the economic discussions, the Soviet delegates 
could report at least one success. They finally gained a clear picture of Germany’s 
aviation industry. After the two previous trips to Reich aircraft factories, the 
Soviet leadership still believed that the Germans had shown and sold them inferior 
equipment. So Yakovlev was sent along with Molotov’s mission to tour even more 
German plants. This third visit, which lasted two weeks, finally did the trick in 
convincing the Soviets that they really had been shown the true level of German 
technology. 

But why, Yakovlev and others wondered, had the Germans revealed their 
secrets? The answer came during one of the inspection tours when the Soviets 
were shown a visitor’s log containing the names of French, British, and American 
aviation experts. As Yakovlev explains, “It became clear that the French general 
had been shown this, the best of the German aircraft manufacturing plants, as 
proof that German air power was immeasurably superior to that of France. They 
tried to scare the French and the British, they tried to scare the Americans, and 
they hoped to scare us as well.” 22 

TARIFFS AND TOLLS, DECEMBER 1 

If Hitler’s policy all along had been to intimidate the USSR into favorable 
economic and political terms, his plan had fallen well short of its mark. But, of 
course, that was not Hitler’s real agenda. The Ftihrer insisted on invading the 



146 Feeding the German Eagle 


Soviet Union come spring. Molotov’s attitude in Berlin and the USSR’s 
continuing unwillingness (actually inability) to provide the sort of economic aid 
Hitler deemed necessary only reconfirmed his earlier decision to attack as soon as 
possible. 

Growing strategic and economic concerns also reinforced this scheme to cut 
the Gordian knot entangling Hitler’s master plan. The WiRuAmt , for example, 
concluded that Germany’s raw material supplies could last comfortably only 
through the summer of 1941. After that there were would be severe cutbacks. 23 

Rubber stocks in particular were already running critically short, having sunk 
to 1,500 tons of natural product in October 1940, the lowest point until late in the 
war. Without the 4,500 tons of natural rubber that had been shipped to Germany 
via the USSR in 1940, the Germans would already have completely exhausted 
their reserves. 24 Without at least some natural rubber, synthetic rubber was almost 
useless; without any rubber, boots and then tires could no longer be produced; and 
without boots and tires. Hitler’s armies were immobile. 

Realizing their reliance on the tenuous and soon-to-be-severed Trans-Siberian 
rail link, the Germans further tightened rubber consumption. 25 They also began 
planning for yet another Buna plant and even began preparing to smuggle rubber 
into Europe with blockade breakers. 26 

Despite continuing concerns about the wisdom of the proposed attack, 27 other 
preparations for Operation Barbarossa were also under way. Goring initiated more 
serious economic planning, 28 and the military carried out a series of war games on 
the campaign in the East. 

Although Hitler’s real strategy called for an invasion, Germany’s public 
position was that the Molotov visit had been a success 29 and that the economic 
negotiations were progressing satisfactorily. In fact, political relations continued 
to deteriorate, despite the appointment of Dekanosov as Soviet Ambassador in 
Berlin. 30 Hungary and much later Bulgaria joined theTripartite Pact; 31 but Stalin’s 
November 25 letter offering to join the alliance was rejected and essentially 
ignored by Hitler because it stipulated that the Soviet Union would retain or even 
expand its dominant influence in countries such as Finland, Rumania, and 
Bulgaria. The result was no junior partner status for the USSR and consequently 
no political settlement from the Fiihrer? 1 

While papering over these political disputes, the German media also presented 
the ongoing economic discussions in a positive light. This at least had the merit 
of being true, for the next few weeks at any rate. Hitler still wanted what resources 
he could get out of the Soviet Union before the attack, and he did not want to give 
away his real intentions by any dramatic economic break. 

The German economic negotiators were obviously even more eager to reach 
a settlement than Hitler was, because they still believed a long-term arrangement 
could and should be reached. If presented in the right light, an economic 
settlement might even overturn the general anti-Soviet direction of German policy. 
For his part, Stalin seemed satisfied that Molotov had given a sufficiently high 
opening bid and that there was now some room to compromise, at least on a few 



The Final Plan: Part II 147 


economic issues. Given these auspicious circumstances, the German negotiators 
expected that during the next few weeks, “in contrast to the talks in September, the 
atmosphere of the negotiations should be extraordinarily friendly.” 33 

Sure enough, Schnurre was soon describing the negotiations as “quite 
cordial,” though he wondered whether the friendly atmosphere was the result of 
real Soviet desire for progress or of “the rather considerable entertainment 
program provided by the Russians.” 34 Nevertheless, a series of agreements were 
reached, especially by the end of the month. Yakovlev submitted an order for 
additional German aircraft (ten Benz 601 engines, five Junker-52s, two Domier- 
217s, and two Heinkel-llls) 35 , which the Germans, after some hesitation and 
some changes to the list (now including ten Benz 601 engines, ten Junker-52s, two 
Heinkel-llls, three Messerschmidt-109s, three Messerschmidt-llOs, and five 
Messerschmidt-108s), eventually accepted. 36 The turret and munitions accord was 
completed by the end of the month as well. 37 And the Germans tentatively agreed 
to early shipments of 13 million RM in used machines and later deliveries of 
30,000 tons of aluminum to help balance the current trade deficit. 38 

On their side, the Soviets first increased their grain offer from 1.2 million tons 
to 1.5 million tons 39 and then eventually, on November 28, acceded to the entire 
German request for 2.5 million tons. 40 Schnurre was ecstatic, describing this 
agreement and other Soviet concessions on the twenty-eighth “as a surprising 
indication of good will on the part of the Soviet Government.” 41 In contrast, 
Military Attache Kostring, who was as favorable to closer relations with the USSR 
as any of the German representatives, pointed out that before the war Russia had 
exported 11 million tons a year. 42 In other words, this was no major concession on 
the Soviet part. 

But it was progress, progress that was furthered by the signing on December 
1 of a major treaty governing tariffs and tolls between the two empires. This 
understanding built on earlier agreements from December 23, 1939, and October 
1, 1940, and effectively completed the transportation arrangements, or so the 
Germans hoped. 43 

Regardless of the relative success of the November 28 meeting with Molotov 
and the December 1 Tariff and Toll Treaty, however, this period can on no 
account be considered one of easy friendship, much less one of Soviet economic 
appeasement. Instead, we find the usual continuing problems in the trade 
negotiations. One such issue was transit trade, as the Germans protested the once 
again increasing restrictions imposed by the USSR. 44 

Even more contentious were the talks concerning Petsamo nickel. The 
Germans concluded that the Soviets had no vital economic interest in the area and 
must therefore be using this issue as a political test. 45 Upon Molotov’s return to 
Moscow, Schulenburg reasserted Germany’s claim to 60 percent of Petsamo’s 
nickel production; 46 but the Foreign Commissar remained obdurate, and by 
November 26 Schnurre cabled, “Further discussions between Molotov and me will 
not be able to change Molotov’s position.” 47 

Although the Year Two discussions did get under way by the eighteenth when 



148 Feeding the German Eagle 


Schnurre made his initial proposals, these talks also quickly ran into difficulty. 
Soviet exports to Germany were not really the main problem, because the Germans 
basically asked for the same goods in roughly the same amounts that they had 
requested in Year One. Schnurre, for example, had proposed a 610 million RM 
total by May 1, 1942, including 2.5 million tons of grain (when the Bessarabian 
shipments were included), 1 million tons of oil, 400,000 tons of manganese, and 
2,400 kilograms of platinum, 48 all about the same amounts (figured over fifteen 
months instead of twelve) as received in the past year. The November 26 Soviet 
counteroffer differed in only a few areas, primarily grain and manganese. 49 

Soviet import demands, however, were the main obstacle, having become even 
more concentrated in the precise areas that the German military needed for its own 
purposes: high-grade coal, machine tools for weapons production, aircraft. 
Schnurre protested to Mikoyan and then to Molotov that Soviet requests were too 
narrowly focused, but he received the same response that Goring had heard from 
Molotov in Berlin—Germany had control of almost all of Europe and should 
therefore have no trouble meeting Soviet demands. 50 Molotov did tentatively agree 
to broaden Soviet orders by the end of the month, 51 but the dispute was far from 
over. 

Despite their eventual general agreement on grain deliveries, the two sides 
remained far apart on the specifics of this deal as well. The Germans objected that 
the proposed Bessarabian grain was expensive, was of low quality, and would be 
shipped at veiy high cost. The Germans also complained that most of the Russian 
grain would be sent via the already overloaded Rumanian route instead of via 
Poland. Furthermore, the Soviets, as they had done in the spring, refused final 
resolution on grain and on property questions until the Germans met certain Soviet 
demands, this time for cobalt and aluminum. 52 

Other general agreements also started to break down when it came time to 
discuss the details. For example, the Economics Ministry, normally a supporter of 
expanded Soviet trade, soon decided against deliveries of 13 million RM in used 
machines because the Soviets had asked for high-value armaments equipment. 53 
In fact, German firms trying to fulfill Soviet orders increasingly lacked the labor 
force necessary to complete their tasks, largely because military items were more 
and more switched to the special “S” class and therefore still outranked the new 
“la” priority-level for Soviet production. 54 

Another increasingly complicated issue was the question of compensation for 
Volksdeutsche property and the Lithuanian Strip. On the latter subject, Schnurre 
initially wanted to trade the Strip for extra grain shipments, 55 but Ribbentrop 
promptly vetoed the idea. 56 Nonetheless, the general question was so important 
that it was referred to Hitler by the twenty-ninth, 57 and the talks were temporarily 
suspended. 

Similar confusion existed in the negotiations for property compensations in 
the other occupied territories. Since the Soviets refused to offer anything other 
than partial compensation, the Germans eventually decided to get as much as 
quickly as they could. On the twenty-fifth Schnurre and Schuleriburg proposed a 



The Final Plan: Part II 149 


one-time payoff of 315 million RM to resolve the whole question. While agreeing 
in principle to the idea, Molotov came back to the earlier Soviet plan for partial 
compensation over ten years. 58 The Germans remained unimpressed by the offer. 59 
But by the twenty-eighth the Soviets had changed their minds and were now 
willing to settle the issue for 200 million RM over two years minus 50 million RM 
of their own property claims in German-occupied lands. Schnurre was excited, 
cabling that the proposal “considerably exceeds our expectations.” 60 Those eyeing 
the earlier Soviet promises, the growing obstacles to trade in the Baltics, 61 and the 
impending onset of Barbarossa, on the other hand, did not share Schnurre’s 
enthusiasm. 

Despite all these difficulties, however, the economic talks during the 
preceding few weeks had been relatively successful, and an increasingly optimistic 
Schnurre now hoped to have the final Year Two treaty finished in time for 
Christmas. 62 The more pessimistic Ritter, however, doubted that the final accord 
could be completed before February. 63 The Soviets would eventually split the 
difference. 


SOVIETS DEMAND SIMULTANEOUS SETTLEMENT, DECEMBER 22 

As usual, the negotiations became a lot tougher before a final settlement could 
be reached. Having hooked the Germans with promises of grain and other items, 
the Soviets now stipulated that the Germans must settle the rest of the bargaining 
on Russian terms. Although still insistent on speedy resolution of the economic 
negotiations, Hitler and the German military were increasingly looking forward 
to Barbarossa 64 and were therefore unwilling to meet many of these demands. As 
a result, the negotiations sputtered. 

For the moment, though, the German economic negotiators were literally 
drunk with success (after Molotov’s agreement to ship 2.5 million tons of grain to 
Germany, thirty-five of the German delegates having gone out to see how much 
of that total they could drink in its distilled form in one evening). 65 On December 
2, an excited Schnurre listed the remaining obstacles as Petsamo, the Strip, and 
property compensation, but declared, “The sudden and surprising Russian 
compliance will presumably make it possible to bring the economic negotiations 
in Moscow to a close earlier than expected, and thereby to settle most points in a 
manner satisfactory to us.” 66 

The next few weeks did, in fact, see continued progress on a variety of issues. 
Despite some haggling on both sides, the parties reached basic agreement on 
German shipments of war materials, 67 aluminum, cobalt, 68 gold, 69 10.5-cm flak 
cannons, 70 and machines. 71 The Germans even started diverting machine deliveries 
intended for other countries to the Soviet Union. 72 Similarly, the parties agreed to 
terms for Soviet deliveries of most of the items the Germans had wanted, 73 
especially grain. 74 And both sides agreed to reduce the overall Year One totals 
from 425 and 340 million RM respectively to 338 and 242 million RM so that 
accounts could be balanced more easily. 75 



150 Feeding the German Eagle 


As always, however, the road became rough at times, particularly when 
dealing with new questions, and Schnurre was soon cabling Berlin about 
difficulties regarding several subjects. 76 For example, although Schnurre and 
Wiehl were initially enthusiastic about the Soviet offer of 150 million RM over 
two years for German property claims in the Baltics, 77 Ribbentrop continued to 
push for greater compensation for all the occupied territories, 78 but to no avail. 79 
Hitler also kept the Strip question off the table indefinitely, though he still insisted 
that resettlement begin right away. 80 Similarly, the Petsamo 81 and Baltic trade 82 
issues continued to be debated without any immediate resolution in sight. 

More important, the Soviets still refused to ship any more rubber, even though 
the Germans had already purchased the goods in the Far East. 83 The Russians also 
refused a new and somewhat strange German request to ship airplanes to Japan 
via the USSR. 84 Despite continuing German concerns, Soviet wishlists for war 
materials and machines were still somewhat narrowly focused. The Germans had 
made the necessary sacrifices the year before. This time, however, and much to 
Schnurre’s frustration and dismay, 85 reluctant German businessmen and 
government officials were able to deflect some of the Soviet demands because of 
the ongoing preparations for war in the East. Schnurre even proposed, and the 
Soviets eventually accepted, lengthening the time frame of the Year Two deliveries 
from fifteen to eighteen months to compensate for this growing resistance. 86 

Suspicious of the German delays, particularly concerning the Strip, 87 the 
Russians retaliated on the twenty-second by demanding “simultaneous settlement 
of all questions pending between Germany and the USSR.” 88 Although the 
economic and Baltic property questions were already essentially settled, 89 this 
move caused a temporary standoff and ultimately gave the USSR added bargaining 
leverage. 

Even worse than this new economic impasse was the pitiful state of the 
political relationship. After Molotov’s disastrous mission to Berlin and Stalin’s 
ignored letter requesting to join the Tripartite Pact, political discussions ground 
almost to a halt. Although the two sides did tentatively agree on final borders, 90 
their respective negotiators almost came to blows at the initial meeting of the 
Danube Commission (a committee set up at Soviet insistence to discuss control of 
and transport rights on this key waterway) and the organization was disbanded on 
the twentieth. 91 By the eighteenth Hitler had even taken the final step of signing 
the official directives for Operation Barbarossa, the German battleplan for the 
invasion of the Soviet Union. 92 From now on any further economic negotiations 
would be mainly for show. 

SIGN HERE, AND HERE, AND SO ON, JANUARY 10,1941 

But the show did go on, because both parties still believed a deal was in their 
best interests. Consequently, the next few weeks saw the final resolution of the 
various remaining problems and the signing of a series of agreements fashioned 
ostensibly to solidify the economic relationship. 



The Final Plan: Part II 151 


Hitler still desired an arrangement in part because the Germans still needed 
what resources they could get from the USSR as raw-material shortages became 
more acute. Among other problems, 93 food, oil, and nonferrous metals would 
probably last only through 1941, and rubber might run out even before then, 94 
especially if the planned Trans-Siberian or blockade-breaker shipments failed to 
arrive. 95 Germany’s allies, who were dependent on the Reich for many of their 
needs, were in even worse shape. Italy, for example, would exhaust almost all of 
her raw-material stockpiles within two to six months. 96 

Hitler was also trying not to tip off the Soviets that an attack was coming. 
Therefore, in response to Russia Committee, Foreign Ministry, and business 
complaints that firms producing for export to the Soviet Union lacked sufficient 
skilled labor, 97 new priority directives were issued to insure short-term deliveries 
and rectify the current trade imbalance. 98 Such increases in German exports, 
however, also camouflaged continuing German war preparations. 

For their part, the Soviets still seemed to think that Germany was too 
enmeshed in the air and naval war against Britain and too dependent on Russian 
raw materials to contemplate a major campaign in the east. After all, had not 
Hitler himself pointed out that Germany’s cardinal error in World War I had been 
to wage war simultaneously on two fronts? Even if Hitler had wanted to attack, 
initial war games seemed to show that, with a few modifications to the current 
force structure, the Red Army could handle the Wehrmacht’s blow and deliver a 
devastating counter-strike. 99 In other words, Soviet leaders felt that Germany was 
unlikely to attack in the next year or two, allowing the Soviets enough time to reap 
all the expected benefits of continuing close economic ties with the Reich. 

With both sides still committed to an arrangement but still suspicious of their 
trading partner and the specific terms of the treaties, the negotiators ground away 
at the remaining obstacles. The most important and troublesome of these barriers 
was the problem of the Lithuanian Strip. Although the Soviets were essentially 
holding the economic, property, and boundaiy agreements hostage until this issue 
was settled, Berlin continued to delay, ostensibly waiting for final word from 
Hitler. 100 During the interim, Schnurre was told to stay in Moscow and resolve all 
other questions first. 101 An exhausted Schulenburg welcomed the respite, 102 but he 
still fretted that this delay might undermine the entire project. 103 An agitated 
Schnurre argued that the Soviets had committed themselves to extensive 
shipments that they would be hard-pressed to execute. Therefore, they would 
welcome this opportunity to delay and water down the Year Two settlement. 104 
Postponement would also bring in the disruptive Petsamo question and mess up 
the specific delivery schedules, requiring the whole treaty to be reworked. 105 In the 
meantime Schnurre warned that “my opposites in the negotiations here will in 
their Armenian-Caucasian way connect every question that comes up ... with the 
economic agreement in order to obtain every possible advantage from the present 
situation.” 106 

Despite Schnurre’s urgings, Hitler and Ribbentrop took their time deciding 
exactly what they wanted in return for the Strip. Schnurre rejected payment in 



152 Feeding the German Eagle 


gold, American dollars, or grain in favor of more raw materials or credits against 
Germany’s trade deficit. Schnurre also thought that the most the Soviets would 
offer would be roughly $8 to $8.5 million (splitting the difference between the 
$3.86 million Soviet proposal and the $13 million German proposal). 107 While 
agreeing that Germany should seek repayment in raw materials, Ribbentrop still 
insisted on the $ 13 million total, much of which should be in nonferrous metals. 108 
As Weizsacker explained to Schnurre in a letter apologizing for the short leash 
that the economic negotiators were being kept on, “those who had the power of 
decision were acting on the assumption that Germany, in the last analysis, ‘held 
the longer arm of the lever.’” 109 

Schnurre finally met with Molotov on December 30 to begin talks on the 
Strip; but, as Schnurre had expected, the Foreign Commissar quickly rejected the 
$13 million figure. 110 During the next week, the two sides did agree to include the 
Strip settlement in a secret protocol, 111 but they continued to debate the details of 
what would be included in this protocol. By the third, the Soviets had come up 
with an offer of 6,000 tons of copper, 2,000 to 2,500 tons of nickel, and 100,000 
tons of manganese divided into eight quarterly shipments, a deal Schnurre thought 
the German government should accept. 112 

But two years was too long for Hitler, what with Barbarossa looming in five 
months. So while accepting the Soviets’ $7.5 million total (31.5 million RM), 
Ribbentrop still demanded immediate shipment with at least half in nonferrous 
metals and the other half in gold. 113 Molotov initially rejected the idea 114 and 
offered instead to shorten the time frame to one and a half years if some raw 
materials and gold could be substituted for the metals. 115 When Ribbentrop 
persisted in his demands, despite Schulenburg’s protest that this tactic might 
“thwart the realization of all other agreements,” 116 Molotov responded with a new 
compromise—one-eighth of the total in metals (about 4 million RM) delivered 
over three months and the rest in gold (about 28 million RM) credited immediately 
against German gold shipments. Ribbentrop quickly agreed, and the final piece of 
the economic puzzle was put in place. 117 

Despite the fact that only a couple of substantially new elements had been 
added to the economic arrangement, the negotiations had still taken more than two 
months to reach their conclusion. The long and difficult bargaining required to 
resolve these relatively insignificant issues, for example with the Lithuanian Strip, 
“show clearly to what extent the relations between the two countries had 
deteriorated.” 118 

Nonetheless, a deal had been reached. On January 10 a series of documents 
were signed in Moscow, completing the arrangements on the new borders, 
property compensation in the occupied territories, trade balances for Year One, 
trade with the Baltics and Bessarabia, control of the Lithuanian Strip, transit costs, 
and delivery schedules for Year Two. 119 As the Soviets had wanted, the new treaty 
structure regulated almost all of the remaining economic questions and laid the 
foundation for a long-term relationship that would greatly benefit the Soviet 



The Final Plan: Part II 153 


Union. Unfortunately for Stalin, Hitler had no intentions of developing such a 
long-lasting partnership. 

NOTES 

1. Appendix A, Tables 1.5 and 1.6. 

2. Appendix A, Tables 1.7 and 1.8. 

3. PA, R106232, E041957. 

4. BAMA, RH 2/2932, 189. 

5. BAMA, RH 2/2932, 187-88. 

6. PA/HaPol/Clodius, “Schulenburg Telegram (1.11.40),”!? 106002. 

7. PA/HaPol/Clodius, “Ritter Telegram (4.11.40); Schottky and Schnurre Telegram 

(6.11.40) ; and Ritter Telegram (7.11.40),” R 106002. Problems, however, seem to have 
arisen on the tenth (PA/HaPol/Clodius, “Schlotterer Telegram [10.11.40],” R 106002). 
Note that the Economics Ministry was putting heavy pressure on Krupp to accommodate 
Soviet demands for these turrets as well as the Widia Process and other items still available 
to balance accounts with the USSR (HA Krupp/Werksarchiv, “Krupp und RuBland 1918- 
1941,” WA VIIf 1562, 12). 

8. PA, R 106232, E041953, and PA/HaPol/Clodius, “Ritter Telegram (7.11.40),” 
R 106002. 

9. PA, R 106232, E041955, and DGFP, D, 11: 253, doc. 318. 

10. PA/HaPol/Clodius, “Schefold Telegram (10.11.40),” R 106002. 

11. PA/HaPol/Clodius, “Aufzeichnung Voss (3.11.40) and Voss Telegram 

(15.11.40) ,” R 106002. 

12. PA, R 106232, 453292-94; DGFP, D, 11: 521-22, doc. 317; and BA/RWK, 
“Warensendungen nach Estland, Lettland und Litauen 1940,” R 11/1338, 10-18. 

13. PA/HaPol/Clodius, “Schlotterer Telegram (13.11.40),” R 106002. 

14. Appendix A, Table 1.5. 

15. One new problem had arisen. Some German agencies had not yet adjusted to 
Goring’s change of priorities and were refusing to issue the usual export subsidies. German 
businesses wanted to pass along the added cost to the Soviets, much to the German 
negotiators’ alarm (PA/HaPol/Clodius, “Schlotterer Telegram [15.11.40],” 7? 106002). 

16. DGFP, D, 11: 454-55, doc. 275. 

17. PA, R 106232, E041956. 

18. Weizsacker described the economic negotiations to this point as “satisfactory” 
(DGFP, D, 11: 521, doc. 317). 

19. For more details on the visit, see NSR, 217-54. 

20. Weinberg, Germany and the Soviet Union, 140-45. 

21. Hilger and Meyer, 322-23. 

22. As quoted in Bialer, 121. 

23. BAMA, RW19/338, 168. 

24. Appendix A, Table 3.3. 

25. BAMA, RW 19/164, 90-91. 

26. Theo Michaux, “Rohstoffe aus Ostasien. Die Fahrten der Blockadebrecher,” 
Wehrwissenschaftliche Rundschau (1955): 486. 

27. Haider, 286-87. 

28. NC&A, 4: 1084-85. 



154 Feeding the German Eagle 


29. See Weizsacker’s laudatory November 15 memorandum to all German diplomatic 
missions ( NSR , 255), and the analysis of the general German reaction in Noakes and 
Pridham, 2: 808-9. Even the very well-informed Americans seem to have accepted the 
proposition that the Molotov meeting would lead to closer political and economic 
cooperation (EXC/S, 1940, 1: 585-86). 

30. For the American assumption that this move signaled closer relations between 
the two countries, see FRUS, 1940, 1: 587. 

31. McSherry, 2: 164-73. 

32. Bullock, Hitler and Stalin , 690-91. 

33. BAMA, RW45/14, 3: 40. 

34. DGFP, D, 11: 650, doc. 377. 

35. PA, R 106233 , 455968-70. 

36. PA, R 106233, E041970-71. The Air Ministry also agreed to provide teaching 
materials and various components in return for possible permission to transport some 
planes to Japan and to visit some aircraft factories in the USSR. 

37. PA, R 106233, E041976. 

38. PA, R 106233, E041963-67. 

39. PA, R 106233, E041973. 

40. PA, R 106233, E041975, and DGFP, D, 11: 723-24, doc. 412. 

41. DGFP, D, 11: 724, doc. 412. 

42. BAMA, RH 2/2932, 200-01. 

43. Reichsbahnrat Gahrs, “Der deutsch-sowjetische Eisenbahnguter- und Tiertarif 
vom 1. Dezember 1940,” Die Ostwirtschaft, November 1940, 131-33. 

44. PA/HaPol/Clodius, “Ripken Telegram (20.11.40) and Marius Vermerk 
(22.11.40),” R 106002. 

45. BAMA, RW 19/244, 336, and BAMA, RW 19/164, 89. 

46. DGFP, D, 11: 590-91, doc. 344. 

47. DGFP, D, 11:716, doc. 405. 

48. PA, R 106233, 455973-78. 

49. DGFP, D, 11: 270-71, doc. 409. 

50. DGFP, D, 11: 272, doc. 409. 

51. DGFP, D, 11: 724, doc. 412. 

52. For the grain negotiations, see BA/RfEuL/RfG/Siburg, “Bericht liber Dienstreise 
nach Moskau von President Dassler, Donner und Dr. Bender vom 20.11.1940 bis 
14.12.1940,” R 15/VII/46, 1-7. For the linking of these various negotiations, see PA, R 
106233, 455995. 

53. PA/HaPol/Clodius, “Schultze-Schlutius und Walter Telegram (26.11.40),” R 
106002. 

54. DGFP, D, 11: 747, doc. 425, and IfW/RA, “Rundschreiben (5.12.40),” YY2389. 
For specific complaints from November 1940 to June 1941 about labor shortages for Soviet 
export production at various German businesses, see BA/EfA/GieBereiindustrie, 
“Lieferschwierigketen einzelner Firmen im Ausfuhrgeschaft mit der Sowjetunion 1940- 
1941,” R 9/XVI/5. 

55. PA, R 106233, E041961. 

56. PA, R 106233, 455980. 

57. PA, R 106233, 455992. 

58. DGFP, D, 11: 717-18, doc. 406. 

59. PA, R 106233, 455990. 



The Final Plan: Part II 155 


60. DGFP, D,ll: 724, doc. 412. 

61. For some of these problems, see BA/EIA/Auflenhandel, “Hinze Report 

(29.11.40) ,” R 9/1/637. 

62. DGFP, D, 11: 747, doc. 425. Schnurre did, however, admit that this would be 
possible only if he were given freer rein to pick different personnel and to promise greater 
German exports. 

63. PA, R 106233, 455991. 

64. The first integrated report on economic preparations for Operation Barbarossa 
was completed on December 10 (Alexander Dallin, German Rule in Russia, 2nd ed. 
[London: Macmillan, 1981], 38). 

65. BAMA, RH 2/2932, 204. 

66. DGFP, D, 11: 765-66, doc. 437. 

67. The Germans initially accepted most of the Soviet demands (PA, R 106233, 
456002), and after the Soviets dropped their requests for new military items from 110 to 
80 million RM, Schnurre pushed for a quick agreement (PA, R106233, 456013). Including 
previous orders, Soviet demands nowtotaled 118.5 million RM (PA, R 106233, 456015). 

68. Despite initial misgivings (PA, R106233, 456003) and later attempts to tie these 
shipments to larger Soviet aluminum oxide shipments for refining into aluminum (PA, R 
106233, E041985-86), the Germans eventually went along with Soviet demands. 

69. PA, R 106233, 456016. 

70. PA/HaPol/Clodius, “Walter Telegram (9.12.40),” R 106002. 

71. On the tenth the Soviets had requested 75 million RM worth of machines (PA, 
R 106233, 456018). 

72. PA/HaPol/Clodius, “Beschlagnahme vonWerkzeugmaschinen fur Russland aus 
dem Export nach anderen Landem (6.12.40),” R 106002. This move caused increasing 
tension with the countries so deprived, especially with Italy. 

73. The Soviets initially rejected some of the specific requests (PA, R 106233, 
456019-20), but eventually gave in on most of the German demands (PA, R 106233, 
456029, and DGFP, D, 11: 914, doc. 539). 

74. Despite their continuing concerns (BA/RfEuL/RfG, “Vermerk [17.12.40],” R 
15/V11/46), the Germans did relent somewhat to Soviet demands for the routing of grain 
deliveries mainly through the Black Sea and Rumania (PA/HaPol/Clodius, “Clodius 
Telegram [12.12.40],” R 106002). As a result, a contract was signed on December 12 for 
250,000 tons (200,000 of which would come from Bessarabia) to be delivered over the next 
two months (PA, R106233, E041999, and BA/RfEuL/RfF, “Getreide Vertrag [12.12.40],” 
R 15/V/43). The Germans considered requesting an additional 300,000 tons of Soviet grain 
when food shortages developed in Belgium (PA/HaPol/Clodius, “Clodius Telegram 

[13.12.40] , 106002; PA/HaPol/Clodius, “Bargan Telegram [20.12.40],” R 105849; and 
PA, R 106233, E042003), had second thoughts by January when the Soviets requested 
payment in gold or hard currency (PA/HaPol/Clodius, “Sabath Vermerk [11.1.41],” R 
105849), but eventually agreed to a settlement in late March (PA, R 106233, E042126). 

75. BA/RFM, “Vermerkbetr.: den deutsch-russischenWarenverkehr(20.12.40),”R 
2/17307, Anlage lb. 

76. DGFP, D, 11: 748, doc. 425. 

77. PA, R 106233, 456007-08. 

78. The Foreign Minister thought more could be done, for example, in return for the 
German navy’s interests in the Kivioli shale-oil concern, something Schnurre believed 
unattainable (PA, R 27806, 324817-19). 



156 Feeding the German Eagle 


79. PA, R 106233 ,456024-27, and DGFP , D, 11: 915, doc. 539. 

80. PA/HaPol/Clodius, “Twardovski Letter (4.12.40),” R 106002, and DGFP, D, 11: 
774, doc. 440. 

81. BAMA, RW45/14, 3: 27. 

82. BAMA, RW45/14, 3: 1. 

83. PA, R 106233, 456020, and BAMA, RW 19/164, 98-99. 

84. DGFP, D, 11: 903^1, doc. 533. 

85. PA, R 27806, 324854. 

86. PA, R 106233, 456021. 

87. First Dekanosov and then Molotov requested more complete German answers to 
earlier Soviet proposals, but the Germans begged off, arguing that Hitler would have to 
decide the question and that he was indisposed during the Christmas holidays 
(PA/HaPol/Clodius, “Woermann Letter [24.12.40],” R 106002, and PA, R 106233, 
E042002). 

88. DGFP, D, 11: 929, doc. 550. For earlier Soviet linkage of the economic and 
property questions, see PA, R 106233, 456034-35, and DGFP, D, 11: 914-15, doc. 539. 

89. DGFP, D, 11: 930, doc. 550. 

90. Eichler, 157. 

91. See Dallin, Foreign Policy, 269, and PA, R 106233, 456047. 

92. Weinberg, Germany and the Soviet Union, 138-39, and NSR, 260-64. 

93. BAMA, RW 19/99, 4a-5a. 

94. Haider, 308, and BAMA/OKW/WiRtiAmt/Ro, “Aktennotiz Thomas (6.1.41),” 
RW 19/2334, 1. 

95. For these general rubber plans and concerns, see Thomas, 302. The three 
blockade breakers were carrying 10,300 tons total, but only one loaded with 3,200 tons 
actually reached the Reich. 

96. BAMA, RW 19/338, 252-53. 

97. For more of these specific business complaints and some of the measures being 
implemented to resolve the problem, see this letter and those following it: 
RWW/Wuppertal/Lange, “Dringendster Kraftebedarf fur die termingemaBe Durchfuhrung 
von Ausfuhrauftragen nach RuBland (23.12.40),” 22-28-14. 

98. Thomas, 280. 

99. Louis Rotundo, “War Plans and the 1941 Kremlin Wargame,” Journal of 
Strategic Studies (March 1987), 88-89. 

100. PA/HaPol/Clodius, “Weizsacker Telegram (23.12.40) and Woermann Telegram 
(25.12.40),” R 106002. 

101. DGFP, D, 11: 943M4, doc. 558. In the meantime, the two parties did agree to 
a further extension of the basic clearing agreement to August 1, 1942 (PA, R 106233, 
456150-53). 

102. Fleischhauer, Widerstand, 211. 

103. DGFP, D, 11: 946, doc. 560. 

104. PA/HaPol/Clodius, “Schnurre Letter (25.12.40),” R 106002. 

105. DGFP, D, 11: 960-61, doc. 568. 

106. DGFP, D, 11: 960, doc. 568. 

107. DGFP, D, 11: 945-46, doc. 560. 

108. DGFP, D, 11: 971-72, doc. 575. 

109. DGFP, D, 11:961, doc. 568. 

110. DGFP, D, 11: 979-80, doc. 580. 



The Final Plan: Part II 157 


111. PA, R 106233 ,456052 & 456062. 

112. PA, R 106233, 456058. 

113. DGFP, D, 11: 1010, doc. 598, and 1027, doc. 607. 

114. DGFP, D, 11: 1028, doc. 608. 

115. DGFP, D, 11: 1039, doc. 614. 

116. DGFP, D, 11: 1040, doc. 615. For Schulenburg’s pessimistic diary entry from 
the ninth, see Fleischhauer, Widerstand, 281. 

117. DGFP,D, 11:1052-53, doc. 625. 

118. Hilger and Meyer, 319. 

119. For more information, see Appendix B and PA, R 106233, 456107-94. 



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Chapter 13 


Grain for Guns 


Although Hitler and the Wehrmacht continued to prepare for a May invasion, 
Stalin seems not to have realized that the blow might actually fall. He did, of 
course, take such precautions as building up the Red Army and gearing up the war 
economy, but he still appeared convinced that the USSR would be able to stay out 
of the war at least until 1942 and perhaps until 1943. 1 The Soviets, therefore, 
responded to the increasingly rigid German line in the spring of 1941 with 
firmness of their own and not yet with a dramatic policy of appeasement. As a 
result, economic relations between the two countries basically repeated the spring 
1940 pattern of slow deliveries and wrangling over contracts despite some 
continuing high expectations. 

ANOTHER SLOW START, FEBRUARY 11 

The new economic arrangements quickly became a political football in the 
ongoing struggle over the direction of German policy. The fundamental problem 
was fairly clear—the Reich lacked raw materials, oil and rubber in particular, 
possessing only enough for a couple of months of heavy campaigning. 2 Germany’s 
allies were also calling for more shipments just as German economic officials were 
considering cutting back deliveries to Italy and elsewhere. 3 

The answer to this looming raw-material crisis was less obvious. Schnurre 
and company had argued that closer economic relations with the USSR provided 
the only possibility for victory and prosperity. Having finally concluded the new 
economic arrangement, Schnurre was triumphant. The American and Japanese 
ambassadors, for example, congratulated him on securing the Reich's economic 
foundations and even implied that the new treaty might win the war for Germany. 4 



160 Feeding the German Eagle 


Believing mistakenly that only Hitler was really in favor of invasion 5 and that 
perhaps even he could be persuaded by the conclusion of the new treaties to 
abandon this idea, Schnurre returned to Berlin preaching the gospel of economic 
cooperation with the Soviet Union. For instance, after explaining to a still 
confused and somewhat irate Ribbentrop that Soviet gold shipments had been 
merely credited against German payments and that he did not have the actual gold 
bars with him, Schnurre went on to proclaim that the new treaty would greatly 
expand trade between the two countries and secure Germany’s food and raw- 
material needs for the foreseeable future. The next day at Hitler’s Berghof, 
Schnurre went even further and movingly declared that this treaty “is the solid 
foundation for an honorable and great peace for Germany.” 6 During meetings with 
Goring, Keitel, Jodi, and others, Schnurre repeated his sermon. Everyone nodded 
in agreement. 7 

Others added their voices to the chorus. Ritter, for example, contended, “The 
new agreement means the final collapse of the English blockade and the English 
attempt at an economic encirclement of Germany.” 8 During a January economic 
session chaired by Goring, “all of the men [with the exception of State Secretaiy 
Backe] expressed themselves very clearly and very energetically to the effect that, 
as seen from the economic point of view, it was impossible to wage war with 
Russia.” 9 The booty gained could never replace the lost Soviet deliveries and the 
Trans-Siberian shipments let alone the materiel used in the fighting. Thomas’s 
initial study of the economic measures necessary for Operation Barbarossa also 
revealed that even a short-term cutoff of rubber and nonferrous metals could have 
crippling effects on the German war economy. 10 

Despite professions of support for Schnurre’s ideas during their two meetings 
in early 1941, 11 Hitler remained unconvinced and war planning continued. 12 He 
even told Schnurre not to publish the terms of Germany’s planned shipments to 
the USSR, probably because he feared future public concern when German troops 
started falling victim on the eastern front to weapons supplied by the Reich. 13 

Nonetheless, Hitler did agree that closer economic relations were necessary 
in the short term. Fortunately for Germany, the exigencies of trading resources 
for machines meant that more of the raw materials would be shipped up front. 
Schnurre noted that Germany would receive by August most of the deliveries owed 
it. Therefore, Germany should abide by the delivery schedule at least up until that 
time. 14 Hitler, of course, concluded that after August, the economic relationship 
would prove more of a hindrance than a support for the Reich—just another 
reason why Germany should attack in 1941 and not later. 

In the next few months, however, getting Soviet deliveries still required that 
Germany adhere strictly to the treaty schedule despite the expected difficulties. 15 
Although cold weather, Soviet renailing work on the rail lines, 16 and delays due 
to the extended Year Two negotiations restricted trade from both sides in January 
and February, 17 the Germans quickly renewed their efforts to meet the short-term 
Soviet demands, 18 but only up to a point. Hitler still refused to place Soviet orders 



Grain For Guns 161 


on a par with military production. 19 He had no intention of making any major 
course corrections now. 

The crippled state of Nazi-Soviet political relations demonstrated Hitler’s 
fundamental goals quite clearly. As the Germans prepared to make their move in 
the Balkans, Bulgaria, a country the Soviets thought of as being in their orbit, 
came under increasing Nazi pressure and eventually joined the Tripartite Pact. 20 
The German hold over Rumania was also strengthened by a coup on January 20. 21 

With the overall situation tense and the Germans no longer giving in quite so 
easily on economic issues, the Soviets remained cautious. Grain negotiations, for 
example, were delayed, 22 as was a 17.5 million RM payment for Baltic property. 23 
Contract talks for oil deliveries quickly stalled because of differences over prices 
and quality, 24 and Soviet cotton shipments soon lagged far behind the planned 
schedule. 25 Despite repeated German protests, the Soviets also kept up the pressure 
on Germany to balance its 1940 accounts with the Baltics and the USSR at an 
early date. 26 The Soviets twisted the screws a bit tighter on the Petsamo question 
as well with their refusal to acknowledge the German interests in the nickel 
mines. 27 

More important, the Soviets began taking hostage what for Germany was 
quickly becoming the most important element of the relationship—the transit 
trade. The Soviets still refused to ship any rubber, 28 and by mid-January they had 
also threatened to stop shipping Afghanistani cotton. 29 Furthermore, the Russians 
were holding up transit licenses 30 and were even planning to raise tariffs 
dramatically on Far Eastern trade, some by as much as 800 percent. 31 

THE EASTERN CONNECTION, MARCH 18 

The wagon of German-Soviet relations lurched along essentially these same 
ruts and grooves over the next month. The political relationship remained at a 
standstill in the spring of 1941, and that left the increasingly tense but still mostly 
correct trade partnership as the last major link that the two sides, each for their 
own reasons, were holding on to. 

For their part, the Germans tried hard, given the continuing priority for 
military production, to meet their short-term delivery dates. 32 By March, the 
Germans had almost eliminated the earlier February 11 trade imbalance and were 
significantly ahead under the terms of the August 19 and January 10 treaties. 33 

In fact, it was now the Germans who were criticizing the Soviets for falling 
behind on their scheduled shipments. The old contract having expired and the new 
contract talks having stalled, 34 supplies of Russian oil in particular dropped 
dramatically, from 47,300 tons in February to 19,600 tons in March. 35 Clodius 
complained on March 12 that “Soviet deliveries have fallen off to such an extent 
that it must be seriously doubted whether the Soviet side is prepared to make 
deliveries.” 36 The Germans even considered repeating the Soviet trick from the 
previous fall of stopping shipments to the USSR until the accounts had balanced. 37 

The Germans also lodged frequent complaints against Soviet delays and tariff 



162 Feeding the German Eagle 


increases on the Trans-Siberian Railroad. 38 The Soviets asserted that they were 
being helpful, that most of the restrictions were due to illegal shipping, 39 and that 
the tariffs would not apply to German exports, only to German imports. 40 In fact, 
the Soviets were taking advantage of the German raw-material demands to 
squeeze out a few extra Reichsmarks. At the same time, Stalin could gain 
additional leverage in his upcoming economic negotiations with the Japanese. 41 

The Germans, understandably, rejected these Soviet assurances and instead 
sent a commercial mission to Moscow to resolve the impasse. 42 This delegation, 
however, really had no choice in the matter if Germany wanted to get its precious 
rubber deliveries, a point the Russians highlighted by continuing to hold up any 
German rubber shipments. 43 Despite some intense bargaining, some heated 
exchanges, and some delays in exports to Germany, the Soviets still refused to 
budge. 44 Left with no options, the Germans ultimately caved in to Soviet demands 
on the fifth 45 and accepted the final Soviet terms for transit trade on the 
eighteenth. 46 A frustrated Hilger protested that “in his twenty-one years of service, 
German-Soviet relations had never experienced such an incomprehensible and 
pig-headed attitude from the Soviet side.” 47 Appeasement this was not. 

As in 1940, contract talks also made very slow progress as the Soviets 
effectively raised their prices 15 to 20 percent. Desperate for Russian resources 
and perhaps also calculating that they might never actually have to pay the Soviets 
back, the Germans agreed to Stalin’s demands. 48 

Negotiations for Soviet grain deliveries followed this same pattern of high 
Soviet demands and eventual German concessions. Grain discussions were first 
delayed, 49 then the promised amounts were reduced, and then the prices were 
raised. 50 Difficult negotiations followed, with the Soviets making only minor 
concessions and the Germans finally agreeing to most of the Soviet stipulations by 
March 13. The Germans did get 1.4 million tons, but they had to pay somewhat 
higher prices for somewhat inferior product, and they still received no assurances 
on the remaining 900,000 tons. 51 

While the political and economic relationship continued to deteriorate, Hitler 
reaffirmed his plans for the upcoming invasion, despite persisting concerns and 
occasional opposition. This internal German debate centered largely on General 
Thomas’s evolving study on the economic consequences of Operation 
Barbarossa. 52 Thomas’s initial reports had been quite pessimistic. But Hitler had 
already grown tired of economic nay-sayers, such as Schnurre, and told Goring 
“that everyone on all sides was always raising economic misgivings against a 
threatening war with Russia. From now onwards he wasn’t going to listen to any 
more of that kind of talk and from now on he was going to stop up his ears in 
order to get his peace of mind.” 53 Goring apparently passed the word along to 
Thomas, who revised his work to fit the Fiihrer’s wishes. 54 

The new report, therefore, included Thomas’s earlier negative findings that 
the conquest of the USSR would be a net drain unless a series of impossible 
preconditions were met: the Soviet economy had to be captured intact, the people 
had to be won over to the German cause, the link to the Far East had to be rapidly 



Grain F or Guns 16 3 


reestablished, and the Caucasus oil fields had to be captured in the first blow. 
Thomas, however, also now added that the German invasion would capture 75 
percent of the Russian armaments industry and 100 percent of its precision-tool 
and optical manufacturing. 55 What chance then of the Soviets remaining in the 
war? The Red Army forces left after the first assault could be quickly destroyed. 

As a reward for having contradicted his earlier arguments and for having 
essentially supported Hitler’s belief that the Soviet Union could be easily crushed, 
Thomas was now given charge of economic preparations for the occupation. 56 
Confident that he could accomplish what he had just implied might be an 
impossible task, Thomas set about his new assignment with enthusiasm. 57 


YUGOSLAVIA, APRIL 6 

These preparations for plundering Soviet resources, however, were still at the 
planning stage. In the meantime, the economic relationship continued to follow 
the previous year’s pattern of gradual improvement as warmer weather 
approached, as the difficult contract talks reached their conclusion, and as the 
Soviets tried to influence German political decisions. Although far from perfect, 
this trade partnership was still operating within the established framework, more 
than could be said for Germany’s trade relationship with an erstwhile ally such as 
Japan. 58 

There were, of course, the usual setbacks and problems. The two sides 
continued to bicker over prices. 59 They also clashed on still unresolved questions 
such as Soviet oil-seed deliveries, 60 Soviet repayment of Czechoslovakian credits, 61 
and certain transit issues. 62 

For the most part, however, the 1940 pattern of difficult bargaining giving 
way to a series of new contracts prevailed. An agreement on Soviet shipments of 
platinum and iridium was signed on March 13.“ And on March 27 an oil contract 
following the prices and terms of previous treaties was concluded for 43,000 
tons. 64 

Other aspects of the economic relationship also saw some positive 
developments in the course of the next few weeks. During his March 17 meeting 
with Hilger, for instance, Krutikov assured the Germans that the USSR was doing 
everything possible to speed up its shipments, especially of the key items Germany 
wanted. 65 In particular, the Soviets agreed to put special trains at Germany’s 
disposal to transport rubber from the Far East. 66 Krutikov later arrived in Berlin 
on March 27 to start talks on trade balances that would last until May 11. 67 

The Soviets also fulfilled an earlier promise and allowed a team of twelve 
German aviation experts to tour a series of Soviet plants from March 28 to April 
17. Interestingly, the Soviets had apparently learned from the German example of 
showing off the best facilities in order to impress and intimidate a potential 
opponent. The Germans, at least, were convinced they had been shown the best the 
Soviets had to offer. 68 Unfortunately for Stalin, these demonstrations of Soviet 
armed might had just the opposite effect on Hitler from the one intended and 



164 Feeding the German Eagle 


actually reinforced his desire to attack before the growing Soviet economic and 
military buildup could derail his plans for the east. 69 

For their part, the Germans strove to meet Soviet export demands despite 
increasing labor shortages. 70 On the other hand, there were indications that the 
Germans intended to meet Soviet demands only in the immediate future. The 
Skoda Works, for example, was told on March 22 to cease filling Soviet orders, 
a message that the vice president of the company passed on to Moscow. 71 

Because of information such as this, the Soviets were becoming increasingly 
concerned about the possibility of war with Germany, and this fear may also have 
contributed to the easing of tensions in late March. In an April 5 memorandum, 
Schnurre made exactly this case, concluding that the Soviets were committed to 
closer economic relations with Germany: “To sum up, it may be said that after an 
initial lag Russian deliveries at the moment are quite considerable, and the 
Commercial Agreement of January 10th of this year is being observed on the 
Russian side.” 72 Hitler was still unimpressed and retorted that Stalin would be 
willing to make even greater concessions if Germany had 150 divisions on the 
Soviet border. 73 Such statements did not, however, imply a desire for war, only for 
blackmail, and Hitler may have been trying to give the Soviets, via Schnurre and 
other German diplomats, the false impression that he could be bought off. 

This argument, that Stalin felt he could appease Hitler, should not be 
exaggerated, however. Those like Schnurre who disagreed with the planned 
invasion obviously had a stake in presenting the Soviet Union as more friendly 
than it really was. 74 Schnurre’s description of Soviet deliveries outpacing German 
shipments, for instance, is slightly distorted. 75 While Soviet exports to Germany 
(including the Baltic trade) did increase somewhat from 24.1 million RM in 
February to 32.9 million RM in March, they actually declined to 22.2 million RM 
in April. In contrast, German deliveries jumped from 21.3 million RM in February 
to 35.6 million RM in March to 51 million RM in April. 76 Stalin’s response to the 
growing signs of danger was still cautious opposition and further defensive 
preparations, and thus his approach to the economic relationship did not reveal 
any short-term, aggressive intent, nor did it reveal any real appeasement—vet. 

On April 6, however, Germany invaded not only Greece but Yugoslavia as 
well. Political relations between Germany and the USSR had been stalled since 
Molotov’s visit in November, but neither side had openly opposed the other’s 
actions. That all changed after the March 26-27 coup in Yugoslavia. Although the 
new government was still ostensibly neutral, Hitler quickly decided to invade in 
conjunction with his assault on Greece. The Soviets, on the other hand, 
sympathized with the new regime and signed a treaty of friendship on April 5. The 
next day’s German onslaught and its rapid success, therefore, was a clear sign that 
Hitler cared little for Soviet interests in the Balkans and might be seriously 
considering an invasion of Russia after all. If true, a reorientation of Soviet policy 
would now be in order. 77 



Grain For Guns 165 


NOTES 

1. Nekrich, June 22, 1941, 166-67. 

2. For some examples of Germany’s growing concern about rubber and oil 
supplies, see BAMA, RW19/339, 11, 30, & 32, and BAMA ,RW 19/164, 107-9& 119. 

3. BAMA, RW 19/164, 101, and BAMA, RW 19/176, 66. 

4. PA/Schnurre, Leben, 111. 

5. Gibbons, Soviet Industry, 90. 

6. PA/Schnurre, Leben, 120. 

7. For Schnurre’s various encounters, see PA/Schnurre, Leben, 109-26. See also 
DGFP, D, 12: 19-20, doc. 13. 

8. DGFP, D, 11: 1071, doc. 640. 

9. Trials of War Criminals, ed. Nuremburg Military Tribunal (Washington, D.C.: 
GPO, 1952-53), 13: 1318. 

10. BAMA, RW 19/164, 106. 

11. For the first meeting, see DGFP, D, 12: 4, doc. 4. For the second, see BAMA, 
RW 19/2334, 366467. 

12. Military studies were also showing serious flaws in the German strategy, but 
Haider apparently ignored the evidence and refused to pass along the bad news to Hitler 
(Barry Leach, “Haider,” in Hitler’s Generals, ed. Corelli Barnett [New York: Grove 
Weidenfeld, 1989], 115). 

13. BAMA, RW 19/2334, 366467. 

14. BA/RFM, “Niederschrift liber die Sitzung des Interministeriellen Ausschusses 
vom 4. Februar 1941,”/? 17315. 

15. BAMA, RW 45/14, 2: 170-71. 

16. BAMA, RW 19/99, 3a-3b & 10a. 

17. See Appendix A, Tables 1.5 and 1.6. 

18. For some of these measures, see Philbin, 124-25; BA/EfA/GieBereiindustrie, 
“Lieferungen von Maschinen, Geraten und Waren nach der Sowjetunion 1940-1941,” R 
9/XV1/4, 10 & 12; and PA/HaPol/Clodius, “Syrup Schnellbrief (13.2.41),” R 106003. 

19. BAMA, RW 19/164, 130. 

20. Weinberg, Germany and the Soviet Union, 151. 

21. Read and Fisher, 554. 

22. BA/RfEuL/RfG, “Donner Report (22.1.41),” R 15/V1I/46. 

23. PA, R 106233, E042029 & E042032. 

24. BAMA, RW 19/2814, J005944. 

25. BAMA, RW 45/14,2: 171. 

26. IfW/RA, “Rundschreiben (6.2.41),” YY2389, and BAMA, RW45/14, 2:150 & 
154-55. 

27. PA/HaPol/Clodius, “Blucher Telegrams (20.1 & 21.1.41),” R 106003, and 
DGFP, D, 11: 1206-08, doc. 717. 

28. PA, R 106233, 456093. 

29. PA/HaPol/Clodius, “Ripken Telegrams (14.1 & 17.1.41),” R 106003. 

30. BAMA RW19/245, 39, and PA/HaPol/Clodius, “Schnurre Telegram (1.2.41),” 
R 106003. 

31. BA/RFM, “Vermerk (14.1.41),” R 17315, 1. 

32. For some of these German efforts, see RWW/Wuppertal, “Niederschrift liber die 
Sitzung derLeiter der Prufungsstellen im Reichswirtschafts-ministerium am 19.2.1941,” 
22-168-2. Note, however, that the Germans still showed little interest in meeting Soviet 



166 Feeding the German Eagle 


requirements after August (BA/EfA/Maschinenbau, “Allgemeine Ausfuhrangelegenheiten 

(11.3.41) ,”/? 9/VIII/T). 

33. Appendix A, Table 1.7. 

34. PA, R 106233, 456211. 

35. Appendix A, Table 3.1. Part of this decline was also due to a major train 
accident at the Rumanian border which held up some of the Soviet shipments in Constanza 
(BAMA, RW19/2715, J015190). These delayed deliveries were rushed through in April 
after the rail link had been fixed, somewhat distorting this month’s total as well. 

36. DGFP, D, 12: 282, doc. 157. 

37. PA, R 106233, 456211. 

38. PA, R 106233, E042037-09, E042080, & E042110. 

39. PA,/? 106233, 456101. 

40. PA,/? 106233, 456196. 

41. BAMA, RW 19/245, 54. 

42. The main mission arrived on February 17. For a detailed report on some of its 
activities, see PA, R 106233, E042084-92. A second mission, this one led by Flelmut 
Wohltat, was initially scheduled to begin negotiations with the Japanese on March 11 but 
was now told that it too should stop for a few days in Moscow to help settle the transit 
questions (PA/HaPol/Clodius, “Clodius Telegram [28.2.41],”/? 106003). 

43. BAMA, RW 19/164, 192-93. Even as late as March 15, the Soviets were still 
refusing to ship any rubber for the Germans (PA, R 106233, 456210). 

44. PA, R 106233, E042063 & E042105-07; BAMA, RW 19/339, 91,107, & 136; 
BAMA, RW 19/164, 164; and BAMA, RW 19/245, 63. 

45. PA, R 106233, 456210. 

46. BA/RFM, “Verfugung des Volkskommissars fur den Auswartigen Handel der 
UdSSR fiber den Transit auslandischer Waren durch das Gebiet der Sowjetunion 

(18.3.41) ,”/? 2/10009. 

47. PA, R 106233, E042089. 

48. For phosphate negotiations, for example, see PA/HaPol/Clodius, “Schiller 
Telegram (19.2.41),” R 106003. For general pricing problems, see PA, R 106233, 
E042097-98. 

49. PA/HaPol/Clodius, “Schulenburg Telegram (25.2.41),” R 106003. 

50. PA, R 106233, E042068-69. 

51. BA/RfEuL/RfG, “Zwischenbericht (8.3.41), V ermerk (9.3.41), Zwischenbericht 

(11.3.41) , Aufzeichnung (12.3.41), and SchluBbericht (14.3.41),”/? 15/V1I/46. 

52. There were other, but significantly less influential, studies completed at the 
time. See, for example, BAMA/OKW/WiRuAmt/Wi, “Die Wehrwirtschaft der UdSSR, 
Stand: Marz 1941,” RWD 16/24-25, and BAAP/IG/Vowi, “Die Lieferfahigkeit 
SowjetruBlands und Sudosteuropas fur Deutschland (15.3.41),” 80IG 1/A 4137. 

53. Trials of War Criminals, 12: 1320. 

54. For a more detailed description of the long evolution of this study, see Muller, 
Wirtschaftsallianz, 119-28, and Andreas Hillgruber, Hitlers Strategie: Politik und 
Kriegsfuhrung 1940-1941 (Frankfurt: Bernard und Grafe, 1965), 179-81. 

55. NC&A, 4: 1087-88. For the actual report, see Thomas, 514-32. 

56. Muller, Wirtschaftsallianz, 127-28, and BAMA, RW 19/164, 180. 

57. For general questions about these early German economic preparations for the 
proposed occupation, see again Mfiller, Wirtschaftsallianz, 129-40. 

58. DGFP, D, 12: 327-30, doc. 190. 



Grain For Guns 167 


59. PA, R 106233, E042121. 

60. BA/RfEuL/RtF, “Schroter Abschriften (25.3, 2.4, & 8.4.41),” R 15/V/43. 

61. PA, R 106233, E042114 &E042117. 

62. PA ,R 106233, E042134, andPA/DDfWiO/Wohltat, “GahrsLetter(9.4.41) and 
Vermerk iiber die Besprechung am 9.4.41,” R 27910. 

63. PA/HaPol/Clodius, “Schulenburg Telegram (14.3.41),”./? 106004. 

64. BAMA, RW19/2814, J005940. The April 9 oil contract also followed the details 
of earlier treaties. Note, however, that during the 1940 contract discussions, the Germans 
had stipulated that they receive better conditions in 1941. Instead, nothing changed. On the 
other hand, the Soviets had been threatening to raise prices and had since recanted 
(Schustereit, 351). As with other contract talks, the Germans probably wanted to get as 
much as quickly as they could and decided not to delay the negotiations only to receive 
slightly better terms. 

65. PA, R 106233, 456213-14. 

66. PA, R106233, E042115-16. These trains would take only twelve to fifteen days 
to make the journey across the USSR. The first 1300 tons were sent by two trains on April 
6 and 8 (PA/HaPol/Clodius, “Schulenburg Telegram [12.4.41],”,/? 106004 ). 

67. Die Ostwirtschaft, Apr/May 1941,49. 

68. BAMA/RL, “Bericht iiber die Industrie-Besichtigungs-Reise vom 28.3 -17.4.41 
in RuBland,” RL 3/2245, 1-7. 

69. NC&A, B, 1192-93. 

70. For some of these measures, particularly a March 22 Economics Ministry 
directive and a March 29 OKW directive, see BA, R 9/XVI/4, 15, and a series of letters in 
RWW/Wuppertal, “Siegel (10.4.41), Siegel (3.6.41), and Rausch (7.7.41),” 22-28-14. 

71. Barton Whaley, Codeword Barbarossa (Boston: MIT, 1974), 49-50. 

72. NSR, 319. 

73. PA/Schnurre, Lebeti, 126. 

74. For a more detailed description of the Foreign Ministry campaign against 
Operation Barbarossa, see Gibbons, Soviet Industry, 94-100. 

75. Eichler notes Schnurre’s distortions but refuses to draw the obvious conclusion 
that Schnurre is overstating the case for Soviet appeasement in order to influence German 
policy decisions (Eichler, 187-88). 

76. Appendix A, Table 1.5 and 1.6. 

77. For a more extended discussion of these political events, see Weinberg, 
Germany and the Soviet Union, 148-58. 



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Chapter 14 


Germany Bites the Hand 
That Fed It 

With Operation Barbarossa two and a half months away and with signs of the 
impending invasion increasing almost daily, Stalin apparently decided that his 
policy of cautious opposition toward the Reich had to be changed to one of 
cautious appeasement, at least until the threat of a summer invasion had ended. 
In the economic relationship, therefore, the USSR acquiesced to a series of 
German demands and seemed ready to go even further in meeting the Reich’s 
resource requirements. Again, however, this argument for Soviet appeasement 
should not be overdone. Stalin also appeared confident that the Red Army could 
repulse a Wehrmacht attack, so he was not yet willing to move significantly 
beyond the delivery totals already stipulated. 

While the Soviets were carrying out the terms of the economic treaties in 
order to signal their cooperative intentions and to delay a possible attack, Germany 
was fulfilling the conditions of the various economic agreements, at least for a 
couple of months, in order to camouflage its aggressive designs and to help 
prepare for the imminent invasion. That members of the Foreign Ministry and 
other German officials still believed closer economic relations were possible and 
were still working to persuade Hitler to abandon his plans for conquest only added 
to the confusion in Moscow. Why, after all, would Hitler risk losing a major 
supply of desperately needed raw materials and add a second front when military 
blackmail could accomplish many of the same goals at significantly less risk? 

ANOTHER DELICATE BALANCE, APRIL 18 

This, at any rate, was the case put forward by Schnurre, Schulenburg, 
Kostring, and others. In a series of reports and meetings, they continued to argue 



170 Feeding the German Eagle 


that the USSR was willing to appease the Reich and provide even greater 
quantities of raw materials for years to come. 

Despite some continuing problems with transit licenses and other issues, 1 
Schnurre and company could point to a number of Soviet actions during the next 
two weeks as examples of a new eagerness to work with Germany. On April 9 the 
Soviets agreed to an oil contract for 982,500 tons; 2 a cotton contract was concluded 
on the tenth; and agreements for 6,000 tons of copper, 1,500 tons of nickel, 500 
tons of zinc, 500 tons of wolfram, and 500 tons of molybdenum were signed by 
mid-month. 3 The Soviets also finally settled the 1940 trade deficit issues with a 
special April 18 accord reducing the accounts from 425 to 310.3 million RM. 4 

In political matters the Soviets signed a neutrality pact with Japan on April 
13, followed by Stalin’s famous railroad-station greeting to Schulenburg and 
Acting Military Attache Krebs: “We will remain friends with you—in any event.” 5 
The Soviets also deferred to the Germans in regards to Finland, Rumania, and a 
new border settlement. 6 

CAUTIOUS APPEASEMENT, MAY 10 

But Hitler remained uninterested, and preparations for the invasion 
continued. 7 For example, although the Germans had initially been the ones 
pushing for closer Soviet-Japanese relations, the German press remained 
conspicuously silent about the signing of the neutrality pact. Reich Finance 
Minister Schwerin-Krosigk, for one, took this as a clear indication that war was 
imminent. 8 

Schwerin-Krosigk also added his voice to the small chorus of those German 
officials opposing the upcoming attack. He argued, among other things, that 
Germany would actually lose grain by invading because of Soviet scorched-earth 
tactics, lack of transport, and diminishing German production as the labor force 
was siphoned off to fight in the east. 9 Even though optimistic about Germany’s 
chances in the military engagements, Weizsacker similarly concluded that we 
“would, on the other hand, lose in an economic sense.” 10 

But why fight at all if the USSR was willing to provide substantial shipments 
right now and even greater amounts over the next couple years? Schnurre, for 
instance, echoed Krutikov’s protest that German transportation already could not 
keep pace with the rising tide of Soviet deliveries. 11 And Schulenburg, in an April 
28 meeting with Hitler, asserted that “Stalin was prepared to make even further 
concessions to us,” including up to 5 million tons of grain next year alone. 12 
Acting Military Attache Krebs even claimed that the Russians “will do anything 
to avoid war and yield on every issue short of making territorial concessions.” 13 

Although correct in general that an attack against the Soviet Union would not 
provide the economic windfall Hitler envisioned, some of these arguments were 
obviously exaggerated for effect. Schnurre had argued earlier that the USSR was 
incapable of finding, let alone transporting, a grain surplus of more than 2 million 
tons a year. Now he and others were suddenly talking about 5 million tons or 



Germany Bites the Hand That Fed It 171 


more! Germany could barely cover the immediate Soviet deliveries. How would 
she pay for the rest of the Year Two totals and an additional 400 million RM in 
grain without turning over a huge share of her armaments and machine industries 
to Soviet export production? 14 Furthermore, at the same time that these German 
officials were portraying Stalin as willing to make dramatic concessions, Schnurre 
was complaining to the Soviets about their delays in shipping rubber, 15 about their 
refusal to make even limited compromises on oil-seed contracts, 16 and about their 
general pricing policy. 17 

Soviet deliveries were also not arriving at the torrid pace Schnurre had 
implied to his superiors. Supposedly, the delays in transporting Soviet goods were 
due to an overwhelming increase in Soviet shipments in April. Actually, the 
transportation delays were caused mainly by the confusion resulting from the 
Balkan campaign and by the Soviet insistence that the bulk of German oil and 
grain shipments travel via the already overtaxed Rumanian system instead of via 
Poland or the Baltic. 18 The Soviets, in fact, had fallen 85 million RM behind in 
their accounts by April 20. 19 The Americans even received word “that all Russian 
deliveries to Germany have apparently ceased.” 20 

Stalin, in other words, was by no means willing or even able to subjugate 
himself to the German cause or to hand over all the items that the German 
negotiators claimed he would. His policy remained one of cautious appeasement. 
In addition to the occasional difficulties over rubber deliveries and oil seed 
contracts, 21 for example, the Soviets raised new obstacles to third-party shipping 
along the Trans-Siberian Railroad. 22 More important, Stalin continued his military 
and economic buildup in case Hitler might be planning an actual invasion. 23 

Nonetheless, Stalin was showing a much friendlier face than he had in the 
past. Soviet shipments of rubber and oil in particular had gone up sharply. 24 
Political signs of renewed cooperativeness also abounded, in particular with 
Stalin’s taking over the role of premier from Molotov. 25 Rudolf Hess’s May 10 
flight to England appears only to have reinforced Stalin’s movement toward 
greater concessions to Germany. With England seemingly conniving with 
Germany, the dreaded “capitalist encirclement” might well be upon the Soviet 
Union. 26 Stalin would now have to redouble his efforts to avoid war in 1941. 
Defensive measures had to be stepped up and cautious appeasement might have 
to become real appeasement. It was, as usual with Stalin, the logical move. 


THE LAST SHIPMENTS, JUNE 22 

Unfortunately for Stalin, Hitler did not always follow the dictates of logic. 
Although he might pretend that economic blackmail was his preferred strategy and 
he might thereby deceive many prescient observers up until the very eve of the 
invasion, 27 he in fact remained firm in his plan to attack the USSR as soon as 
possible. Preparations for war, therefore, continued at an increasingly rapid pace. 28 

Some of these preparations called for throttling back deliveries to the USSR, 
but only at the very last minute. In fact, German exports hovered around 50 



172 F eeding the German Eagle 


million RM a month in April, May, and June; 29 and Hitler continued to give Soviet 
orders high priority. 30 German construction work on the ex-Lutzow, for example, 
remained right on schedule until June 13 with seventy engineers and fitters 
working on the cruiser. 31 The Russia Committee also continued to negotiate minor 
changes in the trade relationship up until almost the very date of the attack. 32 

Some German firms, however, did begin delaying their projects, in part 
because of the increasingly obvious political instability, 33 in part because of tepid 
government support for delivery contracts extending beyond August, 34 and in part 
so that they could avoid shipping the items entirely if war broke out. 35 In May 
Krutikov was already complaining about delays in releasing German aircraft for 
delivery to the USSR. 36 But the protest was never followed up, and the planes 
apparently were never shipped. 37 The Germans also procrastinated on the next 
round of trade balance talks, again with only a mild Soviet complaint. 38 Shortly 
before the attack German ships began leaving Soviet harbors, some without having 
unloaded. 39 And on the night of the invasion, the Germans even ferried out their 
remaining workers from the Liitzow project in Leningrad. The Soviets let them all 
go. 40 

Stalin, too, was preparing for war, but he still believed he could avoid a short¬ 
term clash. 41 Economic appeasement, for instance, might help persuade Hitler not 
to attack. Soviet exports to Germany, therefore, jumped to 50.8 million RM in 
May and 58 million RM in June. 42 Even though the Germans had failed to 
negotiate contracts for the delivery of certain items, such as manganese and 
sulphur, and appeared unwilling to start talks now, the Soviets still continued to 
deliver these goods with only minimal protests. 43 By June 18 the Soviets had even 
promised the Japanese that they could ship much greater totals along the Trans- 
Siberian railway. 44 

Based on these increasing Soviet export totals, Schnurre concluded on May 
15 that “we could make economic demands on Moscow which would even go 
beyond the scope of the treaty of January 10, 1941.” 45 The German navy argued 
similarly on May 2 that the “Russian government is endeavoring to do everything 
to prevent a conflict with Germany.” 46 

Of course, this policy of economic appeasement could go only so far. Stalin, 
in fact, still remained unwilling to go much further than the specific terms of the 
economic treaties. He might hint that greater concessions were possible, and he 
might ignore certain German actions, but this strategy could always be reversed 
when the summer’s danger had passed. After his first round of talks with 
Krutikov, for instance, Schnurre had to admit, “Despite his constructive attitude, 
Krutikov’s stand when defending Russian interests was firm. He showed no 
extreme willingness to give way which might have been construed as weakness.” 47 
From shale oil 48 to grain for Belgium 49 to transit licenses 50 to transport schedules, 51 
the Soviets still held their ground on a variety of issues over the coming month. 

Transport licenses and schedules were relatively minor concerns, however. On 
the major questions of oil, rubber, and grain, the Soviets were doing just about 
everything they could to meet the German demands. Warehouses in Vladivostok 



Germany Bites the Hand That Fed It 173 


in the Far East 52 and Varna and Constanza in Rumania 53 were filling up faster 
than the German and Soviet transportation systems, overloaded as they were with 
military preparations, could handle. The pace continued until the eve of battle with 
a Soviet express train, carrying 2,100 tons of desperately needed rubber, crossing 
the border only hours before the invasion began! 54 

Stalin’s attempts to buy off Hitler for the short term, however, had no effect. 
Having given every indication that he was ready to negotiate, especially with his 
June 13 TASS statement, 55 Stalin waited and waited for the German demands he 
was sure would precede any attack. 56 Even after he had received definitive proof 
of Hitler’s aggressive intentions from the British Ultra intercepts, he still expected 
a German ultimatum. 57 It never came. Instead, on June 22, 1941, Nazi Germany 
turned to bite the hand that had fed it for the past twenty-two months. 

COUNTING THE COSTS, 1941-44 

Expecting a quick victory and an economic bonanza, Hitler was soon 
disappointed on both accounts. As Schnurre, Schulenburg, and others had warned 
him, the invasion of the east proved to be a long and exhausting affair from which 
Germany received very little of the economic benefit Hitler and some of his 
military advisors had anticipated. 58 The occupation itself was brutal, contused, and 
inefficient. 59 After almost four years of control and incalculable costs, the Germans 
had been able to squeeze out of the Soviet Union only about 4.5 billion RM. In 
contrast, tiny Belgium had contributed roughly 9.3 billion RM to the Reich. 60 

Hitler did manage to avoid delivery of the nearly 750 million RM in still 
pending Soviet orders, roughly 230 million RM of which would have been needed 
just to cover the German deficit in the clearing accounts. 61 On the other hand, he 
also forfeited substantial Soviet raw material shipments—520 million RM worth 
of counterdeliveries for the remainder of the 750 million RM in Soviet orders and 
roughly 400 million RM worth still owed Germany from the 1935 and 1939 
credits and a few other accounts. 62 

If the Germans had been so dependent on Soviet economic aid and if these 
vital supplies were now cut off, how did Germany’s war economy survive? In 
particular, how did it handle the loss of the four key items it had imported from 
or via the USSR: oil, grain, manganese, and rubber? The short-term answer was 
that conservation, synthetic production, and Speer’s efficiency drive helped bridge 
the gap. The long-term answer, however, was that the German war economy and 
Hitler’s plans for world conquest were doomed to failure once the Russian 
campaign fell short of its ambitious goals. From 1942 until the end of the war, the 
Germans barely managed to scrape together enough reserves for a few more major 
offensives. But having failed with each increasingly desperate effort, the Germans 
were eventually forced over onto the defensive and then into complete surrender. 

Oil was the main obstacle. The Wehrmacht already began experiencing local 
shortages in the summer of 1941, 63 and by November lack of fuel threatened to 
halt the whole operation in the east. 64 By 1942 the problem had become even more 



174 Feeding the German Eagle 


critical, making the Caucasus the primary goal of the summer campaign. As Hitler 
himself declared during a June 1, 1942, conference, “If I do not get the oil of 
Maikop and Grosny, then I must end this war.” 65 

Germany, however, no longer had the strength nor the oil reserves necessary 
to achieve such an ambitious objective. Hitler failed to get his oil, but he still 
refused to end the war; and the Reich was reduced to a hand-to-mouth existence 
for the duration. By 1942, for example, the Italian fleet had to remain in port 
because of lack of fuel. 66 Once the Allied bombers began concentrating on 
Germany’s synthetic fuel plants in mid-1944, what little oil reserves the Germans 
had left completely disappeared. By late 1944 many German planes now sat idle, 
and in-air training for new pilots was cut to a mere one hour a week. 67 

Food supplies were also dwindling, 68 but the envisioned 5 million tons a year 
from occupied areas in the USSR never materialized. In fact, over four years, the 
Germans managed to ship out only about 1.5 million tons of grain, less than one 
year’s planned deliveries under the previous contracts. 69 

With such meager amounts from Russia, the Germans resorted to cutbacks in 
Germany and starvation for much of the rest of occupied Europe. The food 
shortage in Germany never became quite as acute as it had been in World War I, 
except perhaps in fats and oils, 70 but it did drain morale at home and foster 
opposition in the occupied areas. The Wehrmacht, for example, consumed about 
2 million tons of foodstuffs a year in the occupied territories of the USSR, but this 
was taken directly out of the mouths of the Russian people and helped to alienate 
them from the German invaders. 71 

In the case of manganese, the Germans still held sufficient stocks to survive 
until 1942, thanks to rationing and conservation. 72 By then they controlled the key 
Ukrainian mines, from which they were able to extract enough ore to carry them 
through the next few years. 73 Although their supply of other metals now became 
more critical, the Germans were able to extend their stocks of these items as well 
by substitution and conservation. 74 

Despite drastic usage cutbacks in 1941 75 and some continuing tire shortages 
until mid-1943, 76 the Germans also managed to replace much of the rubber lost 
when the umbilical cord to the East was severed, this time through substantial 
synthetic production that had started to come on-line in 1942. Synthetic rubber, 
however, was expensive and still required some natural product, roughly 10 to 15 
percent, to function properly. 77 So the Germans also stepped up their blockade¬ 
breaking efforts. 78 They even tried to produce their own natural rubber using the 
Russian dandelion as the base material! 79 

Although this third project failed miserably, the combination of Buna plants 
and blockade-breakers did succeed in bridging the gap from 1942 to 1944. After 
that, bombings of the synthetic materials plants 80 and sinkings of the blockade- 
breakers 81 began taking their toll on the amount of rubber goods being produced. 82 

If the war did not develop the way Hitler had envisioned, neither did it play 
out the way Stalin had planned. Although the attack had come in 1941 instead of 
1942, as he had hoped, Stalin still apparently believed that he had sufficient forces 



Germany Bites the Hand That Fed It 175 


on the front to slow down the Germans and allow for a devastating counterstrike. 83 
According to Volkogonov, the impact of the invasion took four or five days to hit 
Stalin, because he kept expecting that the Red Army would halt the German 
advance and push the Wehrmacht back across the border. Such news never came. 
It was then that Stalin “simply lost control of himself and went into deep 
psychological shock.” 84 In the end, however, space, weather, and, most important, 
German overconfidence, eventually saved the Red Army, and Stalin managed to 
survive Operation Barbarossa. 

Fortunately for the Vozhd and unlike Hitler, Stalin still had alternative sources 
for the materials lost when the invasion began. Britain and particularly the United 
States were willing and able to supply the Red Army with trucks, electronic 
equipment, and other supplies that the Russians would need to win the war over 
the long haul. The difference showed. While Nazi power waned, the Red Army 
became a devastating fighting force that by 1944 had almost complete mastery 
over the Germans. 85 

Although necessary from Hitler’s point of view, 86 the eastern invasion had 
nonetheless been a disaster for Germany. Far from building another economic 
support for the Reich, the invasion had led Germany into a quagmire of economic 
and military destruction. 

NOTES 

1. PA, JR 106233, E042141. 

2. BAMA, RW19/2814, J005940. 

3. BAMA, RW 19/245, 125-26. 

4. NSR, 327. 

5. NSR, 324. 

6. Weinberg, Germany and the Soviet Union, 162-63. 

7. For example, see NC&A, 3:811 for the beginnings of Thomas’s Economic Staff 
Oldenburg, the agency charged with planning much of economic exploitation of conquered 
areas in the USSR. 

8. BA/RFM/Krosigk, “Innen- und auBenpolitische Angelegenheiten der 
Reichsregierung wahrend des Zweites Weltkrieges,” R 2/24243, 34. 

9. BA, R 2/24243, 35-36. 

10. NSR, 333. 

11. DGFP, D, 12: 602, doc. 380. 

12. NSR, 332. 

13. Haider, 383. 

14. For production and export problems already facing the Reich, see BAMA, RW 
45/14, 2:29, and Volkmann, Kriegswirtschaftsraum, 123-28. At the then current rates, the 
planned 2.5 million tons of grain would have cost about 400 million RM of the 630 million 
RM allotted under the Year Two treaty (BA/RfEuL/RfG, “Vertraulicher Vermerk fur Herm 
Ministerialrat Dr. Schefold [2.5.41],” R 15/VII/46). 

15. PA/HaPol/Clodius, “Schnurre Telegram (22.4.41),” R106004. The Soviets also 
warned that they might switch German rubber shipments back over to normal trains, which 
would require 20 to 25 days for each shipment instead of the 12 to 15 days for the special 



176 Feeding the German Eagle 


trains (PA/HaPol/Clodius, “Tippelskirch Telegram [30.4.41],” R 106004). 

16. PA/HaPol/Clodius, “Schnurre Telegram (23.4 & 29.4.41),” R 106004. 

17. PA, R 106233, 456249-52. 

18. For the general trade figures, see Appendix A, Table 1.5. For grain shipments 
via the Balkans, see BA/RfEuL/RfG, “Quassowski Schnellbrief (24.4.41) and Sommerlake 
Letters (2.5 & 12.5.41),” R 15/VII/46. Oil, on the other hand, did see dramatic increases, 
but also suffered the most from the war-related transportation problems (BAMA, RW 
19/2715, J015158-62, and BAMA, RW 19/2814, J005938). 

19. BAMA, RW 19/245, 125-26. For further German complaints about Soviet 
deliveries during this period, see BAMA, RW 45/14, 2: 14. 

20. FRUS, 1941, 1: 141. 

21. The two sides did, however, eventually reach a compromise by May 9 
(PA/HaPol/Clodius, “Schnurre Telegram [9.5.41],” R 106004). For the text of treaty, see 
BA/RfEuL/RfF, “Russland (17.5.41),” R 15/V/120. 

22. PA, R 106233, E042161. Some of this tough stance was intended not for 
Germany, however, but for Japan. 

23. Although the reports are contradictory, Stalin appeared to espouse a somewhat 
more defiant attitude toward Germany in his May 5 speech to Red Army leaders. At the 
very least, he pressed for heightened preparations for war. See Hilger and Meyer, 330, and 
Werth, 122-23. 

24. Another 600 tons of rubber, for instance, was loaded in Mandschuli at the 
beginning of May (PA/HaPol/Clodius, “Schnurre Telegram [2.5.41],” R 106004). 

25. For details, see Read and Fisher, 573-77, and NSR, 335-36. 

26. For Stalin’ s thinking about England and the effect of the Hess flight, see Andrew 
and Gordievsky, 294, and Gabriel Gorodetsky, “Stalin und Hitlers Angriff auf die 
Sowjetunion,” in Zwei Wege nach Moskau, ed. Bemd Wegner (Munchen: Piper, 1991), 
351-53. 

27. For some of this common wisdom that Hitler was really after greater economic 
concessions, see FRUS, 1941, 1: 142 & 150-51; Read and Fisher, 607-8; Andrew and 
Gordievsky, 264-66; and Churchill, 3: 300-301. 

28. For some of the gruesome plans the Germans were now concocting for the 
occupation of the Soviet Union, see NC&A, 4: 264-65, and 7: 298-305. 

2 9. Appendix A, Table 1.6. 

30. NC&A, 4: 1088. 

31. NSR, 340, and Birkenfeld, Wirtschaftspartner, 504. 

32. IfW/RA, “Rundschreiben (9.6 & 20.6.41),” YY2389. 

33. NSR, 340-41. 

34. BA/EIA/Maschinenbau, “Allgemeine Ausfuhrangelegenheiten (23.5.41),” R 
9/V111/12. 

35. Thomas, 229, and NC&A, 4: 1088. 

36. NSR, 340. 

37. Schustereit, 352. 

38. PA, R 106233, E042175-76, and PA/HaPol/Clodius, “Schulenburg Telegram 
(13.6.41),” R 106004. 

39. Roy Medvedev, Let History Judge, revised edn., ed. & trans. George Schriver 
(New York: Columbia University, 1989), 744. 

40. PA, R 106233, E042170-71. 

41. Werth, 120. 



Germany Bites the Hand That Fed It 177 


42. Appendix A, Table 1.5. 

43. PA/HaPol/Clodius, “Schulenburg Telegram (5.6.41),” R 106004. 

44. PA, R 106233, 45258. 

45. MR, 341. 

46. NC&A, 6: 999. 

47. MR, 339-40. 

48. PA/HaPol/Clodius, “Schulenburg Telegram (16.5.41),”R 106004. 

49. PA/HaPol/Clodius, “Walter Telegram (28.5.41),” R 106004. 

50. PA/HaPol/Clodius, “Behrend Telegram (27.5.41) and Davidsen Telegram 
(11.6.41),”R 106004, and PA/DDfWiO, “Wohltat Letter (17.6.41) ”R 27910. 

51. BA/RlEuL/RfG, “Dormer Abschrift (29.5.41) ”R 15/VII/46. 

52. FRUS, 1941, 1: 145. 

53. BAMA, RW19/2715, J015138-39. 

54. Goralski and Freeburg, 66. Unfortunately, these authors moved the decimal 
place over and came up with the unbelievable total of 21,000 tons arriving on this final 
express train. See Appendix A, Table 3.3, for more details on Soviet rubber shipments. 

55. Degras, Soviet Documents, 3: 489, and Whaley, 207-8. 

56. Weinberg, Germany and the Soviet Union, 166. 

57. Gabriel Gorodetsky, “Was Stalin Planning to Attack Hitler in June 1941?” 
Journal of the Royal United Services Institute for Defence Studies (June 1986): 69. 

58. Gibbon argues that most of the economic planners realized the enormity of the 
task facing them and attempted merely “to mitigate the economic consequences of the 
invasion” and not really to exploit the Soviet Union (Gibbon, Soviet Industry, preface). 
Hitler, however, had apparently hoped for much greater results. 

59. Dallin, German Rule, 59-61, and Gibbons, Soviet Industry, 111. 

60. Trials of War Criminals, 13: 919 & 924. 

61. Figures on the trade balance that the Soviets still held on June 22, 1941, vary 
somewhat: Friedensburg places this figure at 239 million RM, Birkenfeld at 233 million 
RM, and Eichler at 220 million RM (Zeidler, 110, n. 58). Totals for Soviet orders are also 
somewhat vague. Zeidler estimates the figure at 750 million RM (Zeidler, 107), but other 
German figures show a 600 million RM total (BAMA, RW 45/15, 153). All but 5 to 10 
percent of these orders were taken over by the German government. 

62. BA/RFM, “Ein- und Ausfuhrangelegenheiten Deutschland-Russland (3.7.41),” 
R 2/17315, and Eichler, 199-200. Roughly 300 million RM of this debt was eventually 
covered by the government. For the drawn-out compensation procedures, see BA/RFM, 
“Tatigkeitsbericht des General-Verwalters, 1.11.41-31.1.42 (14.3.41),”R 2/16467. 

63. BAMA, RW 19/177, 167a, and Goralski and Freeburg, 78-81. 

64. Van Creveld, Supplying War, 171. 

65. Trial of the Major War Criminals, 7: 260. 

66. USSBS, Oil, Final Report, 36, and USSBS, Oil, Ministerial Report, 75-76. 

67. Yergin, 347. 

68. BAMA/OKW/WiRtiAmt/Stb, “KriegswirtschaftlicherLagebericht,”RJFi9/P.9, 
61a-61b. 

69. Dallin, German Rule, 366-68. 

70. USSBS, Effects, 132-33. 

71. Dallin, German Rule, 368-71. 

72. BAMA, RW 19/177, 166b, and BAMA, RW 19/99, 43a-43b. 

73. Gibbons, Soviet Industry, 195. 



178 Feeding the German Eagle 


74. USSBS, Effects, 111-12. 

75. For some examples, see BAMA, RW19/99, 39b & 50a, and Thomas, 462. 

76. USSBS, Rubber, 16. 

77. BAMA, RW 19/177, 165. 

78. BAMA/OKWAViRtlAmt/HWK, “Akten (26.7.41 ),”RW19/1548, and Michaux, 

487. 

79. Alan Milward, War, Economy, and Society, 1939-1945 (Berkeley: University 
of California, 1977), 264-65. 

80. Speer, 445-46. 

81. Michaux, 504-507. 

82. USSBS, Rubber, 26. 

83. Rotundo, Stalin, 295-96. 

84. Volkogonov, 409. 

85. For an analysis of the extent and impact of Lend-Lease for the Red Army, see 
Hubert P. Van Tuyll, Feeding the Bear: American Aid to the Soviet Union, 1941-1945 
(New York: Greenwood, 1989), 74 & 82. 

86. Joachim Fest, Hitler, trans. Richard and Clara Winston (New York: Vintage, 
1975), 643. 



Conclusion 


Over and over on the eastern front, the same ironic scene was played out. German 
soldiers fed by Ukrainian grain, transported by Caucasus oil, and outfitted with 
boots made from rubber shipped via the Trans-Siberian railroad fired their 
Donetz-manganese-hardened steel weapons at their former allies. The Red Army 
hit back with artillery pieces and planes designed according to German 
specifications and produced by Ruhr Valley machines in factories that burned coal 
from the Saar. 

How did these two great powers come to this point? Despite their ideological 
differences, both Hitler and Stalin wanted to build up their military might and 
overturn the existing order. Since the two economies were naturally 
complementary, Germany and the Soviet Union had reached a series of economic 
agreements in the Twenties and early Thirties. 

But by 1935 the respective military buildups and the growing ideological 
competition were driving the two powers apart. Hitler might increasingly need 
Soviet raw materials to fuel his rearmament efforts, but Stalin had other potential 
customers for his goods and other potential suppliers of machine tools and 
industrial equipment such as the United States or Great Britain. Although 
bartering with Germany had some very distinct advantages, the USSR did have 
other options. The Vozhd, therefore, kept his price for an economic arrangement 
fairly high. 

The situation was reversed in political matters. Stalin needed to break the 
USSR out of its continuing isolation and to pit the capitalist powers against one 
another instead of against the Soviet Union. For that, he needed closer political 
relations with the Reich. Hitler, on the other hand, saw the USSR as a secondary 
military and political factor, perhaps more useful as a bogeyman with which to 



180 Conclusion 


scare the rest of the world than as an ally with which to conquer the world. 
Significantly closer economic relations would imply closer political relations, 
giving the Soviets much of what they wanted and taking this important card out 
of Hitler’s hand. That he did not want. The years 1935 to 1939, therefore, saw the 
Soviets and occasionally some German officials extend tentative feelers, but no 
real movement occurred. 

The new British attitude toward German expansion in the spring and summer 
of 1939 dramatically altered this political equation. Now Hitler needed the Red 
Army a lot more, if for no other reason than to bluff the West into submission 
while he grabbed Poland. Hitler also needed the promise of Soviet raw materials 
to stiffen the spines of his reluctant military leaders and to cover Germany’s 
resource deficit in case of a long war. When the Allies refused to submit to 
Germany’s threats and her display of power in Poland, Hitler’s reliance on Soviet 
economic aid became even greater. 

Holding the upper hand in economic and now also political terms, Stalin was 
repeatedly able to wait the Germans out and drive up the price. The Germans 
might protest and complain at the delays and the Soviet bargaining method, but 
in the end they would go along with most of Stalin’s demands. The August 19 and 
February 11 treaties, therefore, might offer Germany some short-term comfort, but 
the raw materials the Reich received would quickly be used up. In the long run, 
therefore, the terms of these agreements were more beneficial to the USSR, which 
would now be able to build up its war economy and its armed might with German 
technology and machines. 

But here was the catch. Stalin’s strategy required peaceful relations between 
Germany and the Soviet Union for at least the next few years—even better if the 
“capitalist” war dragged on and on. Since almost everyone at the time expected a 
long war, Stalin’s policy seemed eminently logical. He would get territory, 
security, weakened enemies, and the means to build up his own military and 
economy. For this, all he had to do was remain neutral, his preferred option 
anyway, and provide Germany with a few raw materials that the Wehrmacht would 
rapidly chew up fighting in the west. 

But what if Hitler rapidly defeated the Western powers and then turned on the 
Soviet Union? Soviet raw materials, being easier to produce and deliver than gun 
turrets and synthetic-fuel plants, were supposed to be shipped in greater quantities 
during the first year and a half. German counterdeliveries would lag behind. 
Stalin might then be facing a much stronger enemy than he would have in 1939 
without the support of allies such as Great Britain. 

Even after the defeat of France, however, this possibility seemed unlikely. 
England was staying in the war, and Germany, according to the common wisdom 
of the day, still appeared too dependent on Soviet resources to consider an invasion 
in the east. That the German economic negotiators so obviously believed in the 
value of continued cooperation helped to convince Stalin that Hitler would not 
actually attack. 

But the Fuhrer had other ideas. Lebensraum in the east beckoned, and the 



Conclusion 181 


Soviet state seemed ripe for the plucking. The Wehrmacht that had just annihilated 
the Allied armies could easily destroy a Soviet force barely capable of defeating the 
Finns. Leaving the USSR in peace while Germany fought the Anglo-Saxon powers 
seemed by far the more dangerous option. The Red Army would be a growing 
threat, and the Soviet Union would not, indeed could not, supply Germany with 
the raw materials she needed for a major war. Why then not just take the resources 
and eliminate the Soviet menace with one quick campaign? 

Having decided for war, Hitler’s attitude concerning Finland, Rumania, and 
trade relations with the USSR became somewhat more rigid. In response, Stalin 
resorted to a policy of cautious opposition. The Soviets made few if any major 
compromises during the fall’s trade-balance discussions, during Molotov’s visit, 
during the negotiations surrounding the January 10 treaties, and during the 
ensuing contract talks. The Soviets already had the economic arrangement they 
wanted, so these various negotiations added little that was significantly new and 
focused instead on sorting out the details of the previous agreements. 

Economic relations, therefore, remained tense but correct. The Germans, as 
always, tried to extract as many resources as quickly as they could. Having already 
delivered more of their items up front, the Soviets concentrated on making sure the 
Germans kept their side of the bargain. Threats of cutoffs, delays over transit 
licenses, and so forth seemed to do the trick, and German deliveries now matched 
and sometimes even outpaced those of the USSR. 

While goods continued to flow through the normal channels, the political 
situation deteriorated. Hitler appeared increasingly intent on pressuring the Soviet 
Union into greater concessions, or so most thought at the time. Wanting to avoid 
a war in 1941, Stalin responded with increased deliveries and hints of even larger 
shipments to come. Ever cautious, Stalin also built up his military defenses in the 
west just in case Hitler would try to attack. But that seemed unlikely. Again, Stalin 
had made the logical move. 

Unfortunately for Stalin, it was also the wrong move. Hitler’s armies poured 
over the recently agreed-to border and very nearly wiped out the Soviet state. 
Ironically, that Hitler could come so close to destroying the USSR was due largely 
to Stalin’s own efforts. Stalin’s neutrality had allowed the Axis armies to sweep 
over the rest of Europe. While not decisive to the Battle for France, the promise 
of Soviet economic aid, though not yet the actual deliveries, had helped convince 
the German generals to go along with Hitler’s plans and had allowed the Germans 
to take risks they might not otherwise have been willing to consider. 

Having aided Hitler in eliminating the other major armies in Europe, Stalin 
now faced the fall fary of an even more powerful Wehrmacht. The economic 
reserves required for this grand venture had also come in great measure from the 
Soviet Union itself. Of the various items that the USSR had sent to Germany from 
1939 to 1941, oil, manganese, grain, and rubber stand out. Platinum, chrome, 
phosphates, textiles, wood, and other foodstuffs (particularly soybeans) were also 
shipped in significant amounts, but the loss of these items could usually be 
handled by substitution or by increased imports from other countries. 1 



182 Conclusion 


Without Soviet deliveries of these four major items (oil, grain, manganese, 
and rubber), however, Germany barely could have attacked the Soviet Union, let 
alone come close to victory. Germany’s stockpiles of oil, manganese, and grain 
would have been completely exhausted by the late summer of 1941. And 
Germany’s rubber supply would have run out half a year earlier. Even with more 
intense rationing and synthetic production, the Reich surely would have lacked the 
reserves necessary for a major campaign in the East along the lines of Operation 
Barbarossa. 2 In other words. Hitler had been almost completely dependent on 
Stalin to provide him the resources he needed to attack the Soviet Union. It was 
no wonder that Hitler repeatedly insisted Germany fulfill the terms of the 
economic treaties. He could not conquer any Soviet territory until he first received 
enough Soviet raw materials. 

But what did Stalin receive in return? Although this is really the subject for 
a separate study, some tentative conclusions can be reached. Under the clearing 
accounts, the Soviets had shipped roughly 230 million RM worth of raw materials 
in advance. On the other hand, the Soviets avoided repaying the roughly 400 
million RM they owed from the various credits and other accounts. In terms of the 
numbers, therefore, they had come out about even. 

The effect of these imports of largely finished products is more difficult to 
estimate. The Soviets had concentrated heavily on naval equipment, the cruiser ex- 
Liitzow being one example. But the Baltic fleet lost much of its strength when it 
attempted to flee from its base in Tallinn in late August and spent almost the 
entire war bottled up in Leningrad. The Liitzow itself was never completed, but it 
did have four 20.3-cm guns already installed and served as a floating battery in the 
siege of Leningrad until it was sunk on September 17,1941. It was later refloated 
and saw some further action under the name Tallinn , 3 But taken as a whole, 
German naval aid proved of relatively little value. 

The rest of Germany’s shipments seem to have been of somewhat greater 
utility. Soviet aviation experts were quite satisfied with their admittedly modest 
purchases. The Soviets also put great emphasis on German coal deliveries, the 
quality of which apparently exceeded what the Soviets could get elsewhere. 
Although many of the machine tools and much of the other equipment sent to the 
USSR were destroyed or captured in the Nazi invasion, the overall totals received 
from the Reich were great enough that the remainder probably still played an 
important role in reequipping the Red Army. 4 

Nonetheless, these German exports were certainly less vital for the Soviet 
Union than the Russian exports were for the Reich. And in comparison to the 
amounts the Soviets would later receive from the Allied Lend-Lease program, this 
trade with the Germans was insignificant. For the entire period of the Nazi-Soviet 
collaboration, Germany had shipped less than 500 million RM worth of goods. In 
1942 alone, the Allies sent the Russians $1.36 billion of various materials, or more 
than 5 billion RM worth! By 1944, the number had risen to $3.44 billion. 5 If any 
outside power helped the Soviet Union to victory in World War II, it was the 
United States. 



Conclusion 183 


On the other hand, if any country helped the Germans to near triumph in the 
war, it was the USSR. Despite the relatively small delivery totals when compared 
to the later Lend-Lease figures, Stalin had nonetheless unwittingly provided Hitler 
with that extra dose of strength the Fiihrer needed to launch his drive for 
Lebensraum. A little more help, and the German eagle’s bite might well have been 
fatal. 

NOTES 

1. See Appendix A, Tables 2.1 -2.7, for more details. Of the secondary products 
listed, only in platinum did Soviet deliveries account for more than fifty percent of German 
imports in both 1940 and the first six months of 1941. Gold, however, could often be 
substituted for platinum in various chemical processes. 

2. For the likely effects of a cutoff of Soviet supplies on Germany’s raw material 
position, see Appendix A, Tables 3.2-3.5. 

3. Philbin, 126-28. 

4. For more information on the specific totals exported by Germany to the USSR, 
see Appendix A, Tables 2.8-2.10. 

5. VanTuyll, 165. 



This page intentionally left blank 



Appendix A: Tables 


SECTION 1: GENERAL INFORMATION ON IMPORTS AND EXPORTS 

1.1. German Imports from the USSR in Millions of RM, 1912-41 

1.2. German Exports to the USSR in Millions of RM, 1912-41 

1.3. Soviet Imports from the United States, Great Britain, and Germany in 
Millions of Rubles, 1913-40 

1.4. Soviet Exports to the United States, Great Britain, and Germany in Millions 
of Rubles, 1913-40 

1.5. German Imports from the USSR and the Baltics in Millions ofRM, 
1939-41 

1.6. German Exports to the USSR and the Baltics in Millions of RM, 1939-41 

1.7. Percentage of Economic Treaty Terms Fulfilled by Germany, 1940-41 

1.8. Percentage of Economic Treaty Terms Fulfilled by the USSR, 1940-41 

SECTION 2: GERMAN-SOVIET TRADE BY TYPE 

2.1. Soviet Mineral and Chemical Exports to Germany in Thousands of Tons, 
1938-41 

2.2. Soviet Mineral and Chemical Exports to Germany in Millions of RM, 
1938-41 

2.3. Soviet Mineral and Chemical Exports to Germany as Percentage of Type, 
193 8—41 

2.4. Soviet Agricultural Exports to Germany in Thousands of Tons, 1938-41 

2.5. Soviet Agricultural Exports to Germany in Millions of RM, 1938-41 

2.6. Soviet Agricultural Exports to Germany as Percentage of Type, 1938-41 



186 Appendix A 


2.7. Major Soviet Exports to Germany in Thousands of Tons, 1939-41 (Soviet 
Figures) 

2.8. Major German Exports to the USSR in Thousands of Tons, 1938-41 

2.9. Major German Exports to the USSR in Millions of RM, 1938-41 

2.10. Major German Exports to the USSR as Percentage of Type, 1938-41 

SECTION 3: GERMAN RAW MATERIAL STOCKS 

3.1. Soviet Oil Exports to Germany by Route in Thousands of Tons, 1940-41 

3.2. Germany’s Monthly Oil Stocks in Thousands of Tons, 1939-41 

3.3. Germany’s Monthly Rubber Stocks in Thousands of Tons, 1939-41 

3.4. Germany’s Monthly Manganese Stocks in Thousands of Tons, 1939-41 

3.5. Germany’s Monthly Grain Stocks in Thousands of Tons, 1939-41 

3.6. Percentage of Military Consumption of Liquid Fuels and Rubber Compared 
to Percentage of Overall German Economy Converted to War Purposes, 
1939-41 


SECTION 4: GERMAN TRANSIT TRADE VIA THE USSR 

4.1. GermanTotalOverseasExportsVersusExportsviatheUSSRin Thousands 
of Tons, 1940-41 

4.2. German Total Overseas Imports Versus Imports via the USSR in Thousands 
of Tons, 1940-41 

4.3. German Trade via the Trans-Siberian Railroad in Thousands of Tons, 
1940-41 (Soviet Figures) 

4.4. German Trade via the USSR with Afghanistan and Iran in Thousands of 
Tons, 1939-41 (Soviet Figures) 

SECTION 5: TERMS OF SOVIET EXPORT AGREEMENTS WITH 

GERMANY, 1939-41 

5.1. Planned Soviet Exports to Germany for August 19, 1939, to August 18, 
1941 

5.2. Negotiators and Transfer Points for Soviet Exports to Germany, 1939-40 

5.3. Terms of Trade Agreements for Soviet Items Exported to Germany, 
1939-40 

5.4. Planned Versus Actual Soviet Exports to Germany, 1939-41 



Tables of Statistical Information 187 


Table 1.1 

German Imports from the USSR in Millions of RM, 1912—41 1 



Total Imports 

Imports from the 
USSR 

Gold from the 
USSR 

Percentage of 
Total Trade 

1912 

10691 

1528 

— 

14.3 

1913 

10770 

1425 

— 

13.2 

1923 

6161 

147 

— 

2.4 

1924 

9317 

141 

— 

1.5 

1925 

12362 

230 

- 

1.9 

1926 

10001 

323 

43 

3.2 

1927 

14228 

433 

44 

3.0 

1928 

14051 

379 

1345 

2.7 

1929 

13447 

426 

1 

3.2 

1930 

10393 

436 

0 

4.2 

1931 

6727 

304 

247 

4.5 

1932 

4667 

271 

204 

5.8 

1933 

4204 

194 

202 

4.6 

1934 

4451 

210 

227 

4.7 

1935 

4159 

215 

16 

5.2 

1936 

4218 

93 

0 

2.2 

1937 

5468 

65 

0 

1.2 

1938 

5449 

47 

0 

0.9 

1938 (Austria) 

6052 

53 

0 

0.9 

1939 

4797 

30 

0 

0.6 

1940 

5012 

391 

0 

7.8 

1941 (6 months) 

3293 

216 

27 

6.6 

1941 

6925 

327 

27 

4.7 


Source: Statistisches Reichsamt, Statistische Jahrbiicher fur das Deutsche Reich, 1913-1942 (Berlin: 
Reimar-Hobbing, 1913-1942); and Der Aui>enhandel Deutschlands (Berlin, 1939-1941). 





188 Appendix A 

Table 1.2 

German Exports to the USSR in Millions of RM, 1912-41 



Total Exports 

Exports to the USSR 

Percentage of Total 
Trade 

1912 

8957 

680 

7.6 

1913 

10097 

880 

8.7 

1923 

6116 

76 

1.2 

1924 

6568 

91 

1.4 

1925 

9319 

251 

2.7 

1926 

10415 

266 

2.6 

1927 

10801 

330 

3.1 

1928 

12030 

403 

3.4 

1929 

13483 

354 

2.6 

1930 

12036 

431 

3.6 

1931 

9599 

763 

8.0 

1932 

5739 

626 

10.9 

1933 

4871 

282 

5.8 

1934 

4167 

63 

1.5 

1935 

4270 

39 

0.9 

1936 

4768 

126 

2.6 

1937 

5911 

117 

2.0 

1938 

5257 

32 

0.6 

1938 (Austria) 

5619 

34 

0.6 

1939 

5222 

31 

0.6 

1940 

4868 

216 

4.4 

1941 (6 months) 

3332 

240 

7.2 

1941 

6840 

269 

3.9 


Source: Statistische Jahrbucher and Der Au&enhandel Deutschlands. 






Tables of Statistical Information 189 


Table 1.3 

Soviet Imports from the United States, Great Britain, and Germany in Millions of 
Rubles, 1913-40 



Total 

Imports 

Imports from 
the USA 

Imports from 
Great Britain 

Imports from 
Germany 

German Imports 
as Percentage of 
Total 

1913 

4792 

276 

603 

2276 

47.5 

1922-23 

518 

15 

130 

214 

41.3 

1923-24 

814 

178 

171 

157 

19.3 

1924-25 

2521 

703 

386 

357 

14.2 

1925-26 

2636 

426 

452 

613 

23.2 

1926-27 

2487 

508 

352 

563 

22.6 

1927-28 

3295 

654 

166 

866 

26.3 

1929 

3069 

618 

191 

678 

22.1 

1930 

3690 

921 

279 

874 

23.7 

1931 

3851 

801 

256 

1431 

37.2 

1932 

2454 

110 

320 

1142 

46.5 

1933 

1214 

58 

107 

515 

42.4 

1934 

810 

62 

109 

100 

12.4 

1935 

841 

103 

79 

75 

8.9 

1936 

1077 

166 

77 

245 

22.8 

1937 

1016 

186 

48 

151 

14.9 

1938 

1090 

308 

132 

50 

4.6 

1939 

745 

229 

85 

42 

5.6 

1940 

1091 

338 

10 

316 

29.0 


Source: Roger A. Clarke, Soviet Economic Facts, 1917-1970 (London: Macmillan, 1972), 37-41; and 
Vneshnyaya Torgovlya SSSR Za 1918—1940 (Moscow 1960), as cited in Eichler, 276-81. 





190 Appendix A 


Table 1.4 

Soviets Exports to the United States, Great Britain, and Germany in Millions of 
Rubles, 1913-40 



Total 

Exports 

Exports to 
the USA 

Exports to 
Great Britain 

Exports to 
Germany 

German Exports 
as Percentage of 
Total 

1913 

5298 

49 

933 

1580 

29.8 

1922-23 

467 

2 

101 

150 

32.1 

1923-24 

1300 

25 

291 

231 

17.8 

1924-25 

2014 

99 

674 

304 

15.1 

1925-26 

2451 

107 

769 

389 

15.9 

1926-27 

2812 

82 

769 

611 

21.8 

1927-28 

2759 

98 

543 

674 

24.4 

1929 

3219 

149 

706 

749 

23.3 

1930 

3612 

143 

976 

716 

19.8 

1931 

2827 

79 

927 

450 

15.9 

1932 

2004 

60 

483 

350 

17.5 

1933 

1727 

49 

303 

298 

17.3 

1934 

1458 

50 

341 

343 

23.2 

1935 

1281 

93 

301 

230 

18.0 

1936 

1082 

104 

288 

92 

8.5 

1937 

1312 

101 

421 

80 

6.1 

1938 

1021 

67 

283 

64 

6.3 

1939 

462 

65 

101 

46 

10.0 

1940 

1066 

86 

0 

555 

52.1 


Source: Clarke, 37-41, and Vneshnyaya Torgovlya. 






Tables of Statistical Information 191 


Table 1.5 

German Imports from the USSR and the Baltics in Millions of RM, 1939-41 2 



Total Imports 

Imports from 
USSR 

Imports from 
Baltics 

Soviet Imports as a 
Percentage of Total 

Sep. 1939 

349.7 

1.8 

9.0 

0.5 

Oct. 1939 

271.4 

2.2 

8.8 

0.8 

Nov. 1939 

270.1 

5.5 

13.4 

2.0 

Dec. 1939 

299.6 

4.5 

10.5 

1.5 

Jan. 1940 

185.6 

4.7 

9.2 

2.5 

Feb. 1940 

217.6 

10.2 

5.6 

4.7 

Mar. 1940 

230.6 

9.7 

5.5 

4.2 

Apr. 1940 

294.0 

16.7 

6.7 

5.7 

May 1940 

285.6 

21.1 

10.4 

7.4 

Jun. 1940 

331.1 

34.2 

23.2 

10.3 

Jul. 1940 

372.6 

26.6 

17.3 

7.1 

Aug. 1940 

490.6 

67.6 

19.9 

13.8 

Sep. 1940 

541.7 

94.6 

18.7 

17.5 

Oct. 1940 

562.7 

42.4 

11.8 

7.5 

Nov. 1940 

560.0 

28.0 

7.9 

5.0 

Dec. 1940 

542.8 

27.0 

7.0 

5.0 

Jan. 1941 

440.9 

24.0 

3.8 

5.4 

Feb. 1941 

473.9 

19.9 

4.2 

4.2 

Mar. 1941 

553.9 

31.4 

1.5 

5.7 

Apr. 1941 

528.2 

22.2 

0.0 

4.2 

May 1941 

641.8 

50.8 

0.0 

7.9 

Jun. 1941 

654.0 

58.0 

0.0 

8.9 

Jul. 1941 

632.1 

34.8 

0.0 

5.5 

Aug. 1941 

583.3 

29.8 

0.0 

5.1 

Sep. 1941 

582.5 

10.1 

0.0 

1.7 


Source: Der Aufienhandel Deutschlands. 






192 Appendix A 

Table 1.6 

German Exports to the USSR and the Baltics in Millions of RM, 1939-41 



Total Exports 

Exports to USSR 

Exports to Baltics 

Soviet Exports as a 
Percentage of Total 

Sep. 1939 

318.7 

0.1 

6.1 

0.0 

Oct. 1939 

364.0 

2.4 

9.1 

0.7 

Nov. 1939 

373.8 

2.2 

10.2 

0.6 

Dec. 1939 

392.0 

2.9 

12.9 

0.7 

Jan. 1940 

255.8 

3.0 

9.1 

1.2 

Feb. 1940 

251.6 

1.8 

6.9 

0.7 

Mar. 1940 

321.7 

2.6 

8.7 

0.8 

Apr. 1940 

419.9 

8.1 

20.4 

1.9 

May 1940 

375.1 

15.1 

23.7 

4.0 

Jun. 1940 

353.1 

30.8 

20.7 

8.9 

Jul. 1940 

354.0 

25.8 

15.4 

7.3 

Aug. 1940 

360.8 

24.8 

6.6 

6.9 

Sep. 1940 

388.2 

19.9 

9.4 

5.1 

Oct. 1940 

422.4 

14.2 

4.0 

3.4 

Nov. 1940 

499.0 

25.0 

3.6 

5.0 

Dec. 1940 

521.7 

37.7 

3.4 

7.2 

Jan. 1941 

451.8 

29.6 

2.3 

6.6 

Feb. 1941 

514.1 

19.4 

1.9 

3.8 

Mar. 1941 

591.6 

20.6 

15.0 

3.5 

Apr. 1941 

593.1 

51.0 

0.0 

8.6 

May 1941 

591.9 

47.1 

0.0 

8.0 

Jun. 1941 

581.8 

53.2 

0.0 

9.1 

Jul. 1941 

550.7 

21.6 

0.0 

3.9 

Aug. 1941 

584.2 

3.9 

0.0 

0.7 

Sep. 1941 

579.1 

2.3 

0.0 

0.4 


Source: Der Aufienhandel Deutschlands. 






Tables of Statistical Information 193 


Table 1.7 

Percentage of Economic Treaty Terms Fulfilled by Germany, 1940-41 3 



August 19, 1939, 
Trade Treaty 

August 19, 1939, 
Credit Treaty 

February 11, 1940, 
Clearing Treaty 

January 10, 1941, 
Clearing Treaty 

May 1940 

99.8 

90.3 

25.5 

— 

Jun. 1940 

97.6 

93.0 

32.2 

— 

Jul. 1940 

111.0 

105.3 

50.4 

— 

Aug. 1940 

55.0 

76.1 

29.7 

— 

Sep. 1940 

58.5 

80.0 

33.5 

— 

Oct. 1940 

61.8 

79.3 

37.1 

— 

Nov. 1940 

58.5 

83.5 

42.8 

— 

Dec. 1940 

58.9 

98.5 

48.7 

__ 

Dec. 1940 
(Revised) 

58.9 

98.5 

61.3 

— 

Jan. 1941 

61.2 

99.4 

67.7 

— 

Feb. 1941 

60.9 

95.6 

81.5 

101.3 

Mar. 1941 

61.7 

96.5 

90.0 

115.7 

Apr. 1941 

61.6 

99.0 

98.0 

121.7 

May 1941 

63.2 

99.2 

106.6 

175.2 


Source: BA/RFM, “Ubersicht tiber den deutsch-russischen Waren- und Zahlungsverkehr,” R 2/17307. 





194 Appendix A 

Table 1.8 

Percentage of Economic Treaty Terms Fulfilled by the USSR, 1940-41 4 



August 19, 1939, 
TradeTreaty 

February 11, 1940, 
Clearing Treaty 

January 10, 1941, 
Clearing Treaty 

May 1940 

44.1 

28.2 

— 

Jun. 1940 

45.9 

51.7 

— 

Jul. 1940 

51.0 

77.1 

— 

Aug. 1940 

32.1 

51.3 

— 

Sep. 1940 

39.2 

55.3 

— 

Oct. 1940 

44.5 

59.2 

— 

Nov. 1940 

49.2 

62.7 

— 

Dec. 1940 

51.4 

66.9 

— 

Dec. 1940 (Revised) 

51.4 

84.1 

— 

Jan. 1941 

55.5 

87.6 

— 

Feb. 1941 

62.0 

90.3 

8.7 

Mar. 1941 

64.8 

94.3 

21.3 

Apr. 1941 

68.7 

94.7 

45.8 

May 1941 

67.4 

98.1 

112.4 


Source: BA/RFM, “Ubersicht fiber den deutsch-russischen Waren- und Zahlungsverkehr,” R 2/17307. 






Tables of Statistical Information 195 


Table 2.1 

Soviet Mineral and Chemical Exports to Germany in Thousands of Tons, 1938—41 s 



1938 

1939 

1940 

1941 (6 months) 

Oil Products 

78.6 

5.1 

617.0 

254.1 

Copper 

0.0 

0.0 

7.1 

7.2 

Nickel 

0.0 

0.0 

1.5 

0.7 

Tin 

0.0 

0.0 

0.8 

0.0 

Platinum (in tons) 

0.0 

0.0 

1.5 

1.3 

Manganese 

60.9 

6.2 

64.8 

75.2 

Chromium 

0.0 

0.0 

26.3 

0.0 

Chemicals: Finished 

0.0 

0.9 

2.9 

0.2 

Chemicals: Unfinished 

0.0 

0.9 

2.6 

1.0 

Chemicals: Phosphates 

151.6 

32.4 

131.5 

56.3 

Technical Fats & Oils 

4.7 

4.4 

11.0 

8.9 


Source: Statistische Jahrbucher mdDerAufienhandel Deutschlands. 

Table 2.2 

Soviet Mineral and Chemical Exports to Germany in Millions of RM, 1938-41 6 



1938 

1939 

1940 

1941 (6 months) 

Oil Products 

4.8 

0.3 

75.1 

24.8 

Copper 

0.0 

0.0 

7.8 

5.4 

Nickel 

0.0 

0.0 

6.7 

3.4 

Tin 

0.0 

0.0 

3.1 

0.0 

Platinum 

0.0 

0.0 

7.3 

6.5 

Manganese 

2.9 

0.7 

5.5 

6.2 

Chromium 

0.0 

0.0 

2.5 

0.0 

Chemicals: Finished 

0.0 

0.5 

1.3 

0.1 

Chemicals: Unfinished 

0.0 

1.2 

2.7 

1.1 

Chemicals: Phosphates 

3.2 

1.2 

5.5 

3.1 

Technical Fats & Oils 

1.5 

1.1 

6.3 

4.7 


Source: Statistische Jahrbucher and Der Aufienhandel Deutschlands. 







196 Appendix A 


Table 2.3 

Soviet Mineral and Chemical Exports to Germany as Percentage of Type, 1938-41 7 



1938 

1939 

1940 

1941 (6 months) 

Oil Products 

2.2 

0.1 

34.2 

25.0 

Copper 

0.0 

0.0 

6.8 

9.2 

Nickel 

0.0 

0.0 

30.0 

33.3 

Tin 

0.0 

0.0 

11.4 

0.0 

Platinum 

0.0 

0.0 

75.9 

88.1 

Manganese 

14.3 

2.6 

54.5 

64.6 

Chromium 

0.0 

0.0 

65.8 

0.0 

Chemicals: Finished 

0.0 

2.4 

5.6 

1.2 

Chemicals: 

0.0 

2.3 

5.2 

3.9 

Unfinished 





Chemicals: 

5.1 

1.9 

11.9 

7.9 

Phosphates 





Technical Fats & Oils 

2.2 

2.2 

12.7 

14.0 


Source: Statistische Jahrbiicher and Der Aujienhandel Deutschlands. 

Table 2.4 

Soviet Agricultural Exports to Germany in Thousands of Tons, 1938-41 8 



1938 

1939 

1940 

1941 (6 months) 

Raw Textiles 

5.1 

9.0 

99.1 

41.1 

Wood Products 

271.9 

171.9 

846.7 

393.7 

Grains 

0.0 

0.2 

820.8 

547.1 

Meats 

0.0 

0.1 

3.8 

1.9 

Raw Tobacco 

0.0 

1.9 

0.4 

0.0 

Animal Skins 

0.1 

0.2 

2.5 

0.1 

Woven Fabrics 

0.1 

0.1 

0.0 

0.0 

Legumes 

0.0 

10.9 

47.2 

34.8 

Oil Cake 

0.0 

0.0 

29.0 

8.6 

Bed Feathers 

0.4 

0.4 

0.3 

0.3 


Source: Statistische Jahrbiicher and Der Aufierthandel Deutschlands. 








Tables of Statistical Information 197 


Table 2.5 

Soviet Agricultural Exports to Germany in Millions of RM, 1938-41 9 



1938 

1939 

1940 

1941 (6 months) 

Raw Textiles 

2.3 

3.0 

77.6 

32.9 

Wood Products 

19.8 

8.6 

42.3 

25.3 

Grains 

0.0 

0.0 

98.5 

74.0 

Meats 

0.0 

0.9 

6.8 

2.9 

Raw Tobacco 

0.0 

1.9 

0.7 

0.0 

Animal Skins 

2.8 

1.8 

9.2 

3.4 

Woven Fabrics 

1.2 

1.3 

0.0 

0.0 

Legumes 

0.0 

3.4 

16.3 

14.7 

Oil Cake 

0.0 

0.0 

4.3 

1.9 

Bed Feathers 

1.3 

1.3 

1.1 

0.1 


Source: Statistische Jahrbucher and Der Aufienhandel Deutschlands. 

Table 2.6 

Soviet Agricultural Exports to Germany as Percentage of Type, 1938—41 10 



1938 

1939 

1940 

1941 (6 months) 

Raw Textiles 

0.3 

0.5 

20.0 

13.9 

Wood Products 

6.4 

3.1 

11.2 

10.9 

Grains 

0.0 

0,0 

30.1 

58.3 

Meats 

0.0 

0.6 

2.9 

1.4 

Raw Tobacco 

0.0 

1.0 

0.3 

0.0 

Animal Skins 

1.2 

1.0 

8.7 

7.0 

Woven Fabrics 

1.4 

1.6 

0.0 

0.0 

Legumes 

0.0 

8.8 

30.3 

23.9 

Oil Cake 

0.0 

0,0 

9.3 

20.0 

Bed Feathers 

4.3 

4.4 

3.5 

0.7 


Source: Statistische Jahrbucher and Der Aufienhandel Deutschlands. 








198 Appendix A 

Table 2.7 

Major Soviet Exports to Germany in Thousands of Tons, 1939—41 (Soviet Figures) 11 



1939 (Sep.-Dee.) 

1940 

1941 (Jan.-Jun.) 

Grains 

5.7 

897.7 

707.7 

Timber 

90.1 

975.8 

161.7 

Textiles 

8.1 

98.2 

65.1 

Rags 

2.1 

6.0 

1.9 

Meats 

0.3 

3.8 

1.4 

Animal Skins 

0.6 

1.1 

0.1 

Pulses 

8.4 

35.9 

36.5 

Oil Seed Cake 

0.0 

26.2 

15.6 

Fat Vegetable Oils 

0.0 

8.9 

0.5 

Oil 

1.4 

657.4 

282.9 

Manganese 

3.4 

107.1 

54.7 

Chromium 

0.0 

23.4 

0.0 

Asbestos 

1.8 

13.6 

3.2 

Phosphates 

10.3 

163.6 

28.4 

Glycerine 

0.0 

3.7 

0.2 

Other 

13.9 

10.4 

2.4 

Total 

146.1 

3032.8 

1362.3 


Source: W. N. Medlicott, The Economic Blockade (London: Longmans, 1952), 1: 667-68. 







Tables of Statistical Information 199 


Table 2.8 

Major German Exports to the USSR in Thousands of Tons, 1938-41 12 



1938 

1939 

1940 

1941 (6 months) 

Coal 

0.0 

0.0 

3845.9 

1273.6 

Machines 

4.6 

9.1 

19.4 

40.2 

Finished Iron: Tools 

2.5 

0.8 

14.3 

8.4 

Unfinished Iron: Tubing 

15.9 

15.7 

98.7 

61.4 

Motor Vehicles & Planes 

0.0 

0.0 

0.4 

3.0 

Chemicals: Unfinished 

2.6 

0.5 

1.7 

2.1 

Electrical Goods 

0.1 

0.6 

3.3 

3.5 

Optical Equipment 

0.2 

0.1 

0.2 

0.3 

Metals 

0.5 

0.1 

3.7 

3.1 

Naval Equipment 

0 

0 

6 

5 

Source: Statistische Jahrbiicher and Der Aufienhandel Deutschlands. 


Table 2.9 

Major German Exports to the USSR in Millions of RM, 1938-41 13 



1938 

1939 

1940 

1941 (6 months) 

Coal 

0.0 

0.0 

32.5 

1273.6 

Machines 

11.1 

18.6 

50.5 

102.9 

Finished Iron: Tools 

1.7 

0.7 

41.9 

42.9 

Unfinished Iron: Tubing 

4.4 

4.3 

36.5 

31.4 

Motor Vehicles & Planes 

0.0 

0.2 

11.1 

4.9 

Chemicals: Unfinished 

2.1 

1.4 

5.5 

5.4 

Electrical Goods 

1.3 

1.3 

9.4 

14.9 

Optical Equipment 

4.9 

2.5 

5.8 

8.7 

Metals 

2.1 

0.4 

9.1 

9.2 

Naval Equipment 

0.0 

0.0 

9.0 

5.0 


Source: Statistische Jahrbiicher and Der Aufienhandel Deutschlands. 









200 Appendix A 


Table 2.10 

Major German Exports to the USSR as Percentage of Type, 1938-41 14 



1938 

1939 

1940 

1941 (6 months) 

Coal 

0.0 

0.0 

4.6 

3.1 

Machines 

1.4 

2.5 

9.8 

30.2 

Finished Iron: Tools 

0.3 

0.1 

9.1 

10.3 

Unfinished Iron: Tubing 

1.1 

0.3 

7.3 

11.7 

Motor Vehicles & Planes 

0.0 

0.1 

3.4 

3.6 

Chemicals: Unfinished 

0.5 

0.3 

1.9 

3.1 

Electrical Goods 

0.4 

0.4 

4.2 

10.1 

Optical Equipment 

3.9 

2.3 

6.8 

19.2 

Metals 

0.8 

0.2 

3.3 

10.1 

Naval Equipment 

0.0 

0.0 

37.0 

90.9 


Source: Statistische Jahrbiicher and Der Aufienhandel Deutschlands. 






Tables of Statistical Information 201 


Table 3.1 

Soviet Oil Exports to Germany by Route in Thousands of Tons, 1940-41 15 



Overland 

Black Sea 

Baltic Sea 

Total 

Feb. 1940 

25.7 

18.0 

0.0 

43.7 

Mar. 1940 

27.0 

0.0 

0.0 

27.0 

Apr. 1940 

19.5 

5.2 

0.0 

24.7 

May 1940 

31.5 

33.5 

0.0 

65.0 

Jun. 1940 

60.1 

23.5 

6.9 

90.5 

Jul. 1940 

60.9 

23.0 

23.2 

107.1 

Aug. 1940 

43.3 

33.4 

27.3 

104.1 

Sep. 1940 

20.7 

21.9 

8.6 

51.1 

Oct. 1940 

24.5 

21.2 

2.2 

47.9 

Nov. 1940 

19.1 

23.9 

0.0 

43.1 

Dec. 1940 

21.4 

38.2 

0.0 

59.6 

Total 1940 

353.8 

241.9 

68.2 

663.9 

Jan. 1941 

22.3 

28.9 

0.0 

51.2 

Feb. 1941 

17.3 

30.0 

0.0 

47.3 

Mar. 1941 

19.6 

0.0 

0.0 

19.6 

Apr. 1941 

68.7 

14.8 

0.0 

83.6 

May 1941 

28.5 

36.1 

0.0 

64.6 

Total 1941 

156.4 

109.8 

0.0 

266.2 

Total 1940- 
1941 

510.2 

351.7 

68.2 

930.2 


Source: BAMA/WiRuAmt/Ro, “Mineralol-Einluhr-Gesellschaftm.b.H., Berichte 2-\l”RW 19/2814, 
5935-71. 






202 Appendix A 

Table 3.2 

Germany’s Monthly Oil Stocks in Thousands of Tons, 1939—41 16 



Estimated 
Total Stocks 

Aviation, 
Motor, 8c 
Diesel 

Total Soviet 
Exports 

Estimated 

Minus 

Soviet 

A.M.&D. 
Minus Soviet 

Aug. 1939 

2176 

1366 

0 

2176 

1365 

Jan. 1940 

1135 

930 

19 

1116 

911 

Feb. 1940 

1115 

915 

48 

1067 

867 

Mar. 1940 

1110 

910 

70 

1040 

840 

Apr. 1940 

1150 

945 

105 

1045 

840 

May 1940 

1115 

915 

155 

960 

750 

Jun. 1940 

1250 

1025 

235 

1015 

750 

Jul. 1940 

1490 

1220 

331 

1155 

889 

Aug. 1940 

1720 

1410 

426 

1294 

984 

Sep. 1940 

2010 

1650 

495 

1515 

1155 

Oct. 1940 

1900 

1560 

543 

1357 

1019 

Nov. 1940 

1880 

1540 

581 

1299 

959 

Dec. 1940 

1810 

1485 

622 

1188 

863 

Jan. 1941 

1840 

1510 

678 

1162 

832 

Feb. 1941 

1825 

1495 

713 

1112 

782 

Mar. 1941 

1815 

1490 

746 

1069 

744 

Apr. 1941 

1745 

1430 

795 

950 

635 

May 1941 

1665 

1365 

839 

826 

496 

Jun. 1941 

1645 

1350 

877 

768 

473 

Jul. 1941 

1370 

1125 

910 

460 

215 

Aug. 1941 

1290 

1060 

912 

378 

148 

Sep. 1941 

1225 

1005 

912 

313 

93 

Oct. 1941 

1105 

905 

912 

193 

-7 


Source: BAMA/WiRuAmt/Ro, “Mineralolbestande, -Erzeugung und -Einfuhr insb. aus Rumanien und 
UdSSR 1940-1943,” RW 19/2715 , 15070; “The German Oil Industry: Ministerial Report,” in 
USSBS, 1945 (Washington, D.C.: GPO, 1947), Fig. 21; and “Oil Division, Final Report,” in USSBS, 
1945 (Washington, D.C.: GPO, 1947), Fig. 25. 






Tables of Statistical Information 203 


Table 3.3 

Germany’s Monthly Rubber Stocks in Thousands of Tons, 1939-41 17 



Natural 

Synthetic 

Reclaim 

Total 

Natural 

via 

USSR 

Natural 

minus 

USSR 

Total 

minus 

USSR 

Sep. 1939 

17.0 

5.5 

5.8 

28.2 

— 

— 

— 

Jan. 1940 

12.0 

7.5 

5.8 

25.3 

— 

— 

— 

Feb. 1940 

10.5 

7.3 

5.3 

23.1 

— 

— 

— 

Mar. 1940 

9.3 

6.7 

5.0 

20.9 

— 

— 

— 

Apr. 1940 

7.9 

5.9 

4.9 

18.7 

— 

— 

— 

May 1940 

6.0 

5.1 

4.8 

15.8 

— 

— 

— 

Jun. 1940 

4.8 

4.4 

4.7 

13.9 

— 

— 

— 

Jul. 1940 

6.3 

2.9 

4.8 

14.0 

— 

— 

— 

Aug. 1940 

4.6 

2.7 

4.9 

12.2 

— 

— 

— 

Sep. 1940 

3.2 

2.6 

4.7 

10.5 

— 

— 

— 

Oct. 1940 

1.5 

2.2 

4.8 

8.6 

— 

— 

— 

Nov. 1940 

2.2 

1.9 

4.3 

8.4 

— 

— 

— 

Dec. 1940 

1.9 

3.4 

ma 

9.8 

4.5 

-2.6 

5.3 

Jan. 1941 

3.3 

3.8 

4.2 

11.4 

— 

— 

— 

Feb. 1941 

2.9 

2.8 

4.2 

9.9 

— 

— 

— 

Mar. 1941 

2.3 

2.6 

4.0 

9.1 

— 

— 

— 

Apr. 1941 

2.6 

3.6 

4.4 

10.6 

— 

— 

— 

May 1941 

5.7 

3.1 

4.2 

12.9 

18.8 

-15.1 

-5.9 

Jun. 1941 

6.3 

3.4 

4.1 

13.8 

18.8 

-12.3 

-5.0 

Jul. 1941 

6.8 

3.2 

3.8 

13.9 

18.8 

-12.0 

-4.9 

Aug. 1941 

4.7 

3.2 

3.8 

11.7 

18.8 

-14.1 

-7.1 

Sep. 1941 

5.6 

3.9 

3.6 

13.1 

18.8 

-13.2 

-5.7 

Oct. 1941 

4.9 

3.9 

3.3 

12.1 

18.8 

-13.9 

-6.7 


Source: “Oil Division, Final Report, Appendix,” in USSBS, 1945 (Washington, D.C.: GPO, 1947), Table 
C-5; and Medlicott, 1: 669-70. 






204 Appendix A 

Table 3.4 

Germany’s Monthly Manganese Stocks in Thousands of Tons, 1939-41 



Manganese Stocks 

Total Soviet Shipments 

Stocks minus Soviet 

Sep. 1939 

365 

0.3 

364.7 

Jan. 1940 

290 

1.7 

288.3 

Feb. 1940 

260 

2.8 

257.2 

Mar. 1940 

255 

3.6 

251.4 

Apr. 1940 

230 

5.3 

224.7 

May 1940 

205 

8.6 

196.4 

Jun. 1940 

200 

9.7 

190.3 

Jul. 1940 

190 

9.7 

180.3 

Aug. 1940 

185 

11.1 

173.9 

Sep. 1940 

200 

13.0 

187.0 

Oct. 1940 

245 

18.4 

226.6 

Nov. 1940 

240 

41.6 

198.4 

Dec. 1940 

235 

66.4 

168.6 

Jan. 1941 

290 

83.8 

206.2 

Feb. 1941 

260 

87.7 

172.3 

Mar. 1941 

240 

94.1 

145.9 

Apr. 1941 

235 

109.1 

125.9 

May 1941 

210 

129.6 

80.4 

Jun. 1941 

205 

141.6 

63.4 

Jul. 1941 

210 

155.5 

54.5 

Aug. 1941 

200 

177.9 

22.1 

Sep. 1941 

185 

183.4 

1.6 

Oct. 1941 

170 

189.5 

-19.5 

Nov. 1941 

160 

195.6 

-35.6 

Dec. 1941 

140 

208.5 

-68.5 


Source: Der Aufienhandel Deutschlands and BA/SR/RiwP, “Monatliche Ubersichten fiber die 
Rohstoffversorgung. Graphische Darsteilung 1939-1943,” R 24/26. 






Tables of Statistical Information 205 


Table 3.5 

Germany’s Monthly Grain Stocks in Thousands of Tons, 1939-41 18 



Grain Stocks 

Total Soviet Shipments 

Stocks minus Soviet 

Sep. 1939 

5613 

0.0 

5613.0 

Jan. 1940 

5373 

1.7 

5371.3 

Feb. 1940 

5216 

12.1 

5203.9 

Mar. 1940 

5029 

28.1 

5000.9 

Apr. 1940 

4982 

84.0 

4899.0 

May 1940 

4693 

128.1 

4564.9 

Jun. 1940 

4425 

186.5 

4238.5 

Jul. 1940 

4281 

244.0 

4037.0 

Aug. 1940 

4563 

412.9 

4150.1 

Sep. 1940 

4517 

752.7 

3764.3 

Oct. 1940 

4157 

841.9 

3315.1 

Nov. 1940 

3063 

881.1 

2721.9 

Dec. 1940 

3123 

925.0 

2198.0 

Jan. 1941 

2848 

964.2 

1833.8 

Feb. 1941 

2524 

1012.2 

1511.8 

Mar. 1941 

2446 

1097.4 

1348.6 

Apr. 1941 

2159 

1154.3 

1004.7 

May 1941 

1763 

1337.0 

426.0 

Jun. 1941 

1381 

1472.3 

-91.3 

Jul. 1941 

865 

1540.0 

-675.0 

Aug. 1941 

588 

1601.3 

-1013.3 

Sep. 1941 

666 

1625.4 

-959.4 

Oct. 1941 

761 

1637.1 

-876.1 

Nov. 1941 

643 

1637.4 

-994.4 

Dec. 1941 

435 

1640.2 

-1203.2 


Source: Der Aufienhandel Deutschlands and BA/RfE&L/RIG, “Bestande, 1939-1944,” R 15/V1I/41. 






206 Appendix A 


Table 3.6 

Percentage of Military Consumption of Liquid Fuels and Rubber Compared to 
Percentage of Overall German Economy Converted to War Purposes, 1939-41 19 


Gasolines & Diesel Fuels 

Rubber Products 

Overall GNP 

Aug. 1939 

19 

52 

25 

Jan. 1940 

41 

— 

— 

Feb. 1940 

42 

— 

— 

Mar. 1940 

37 

— 

— 

Apr. 1940 

41 

— 

— 

May 1940 

68 

— 

— 

Jun. 1940 

64 

— 

— 

Jul. 1940 

55 

60 

44 

Aug. 1940 

57 

— 

— 

Sep. 1940 

58 

— 

— 

Oct. 1940 

57 

— 

— 

Nov. 1940 

58 

— 

— 

Dec. 1940 

59 

— 

— 

Jan. 1941 

60 

— 

— 

Feb. 1941 

52 

— 

_ 

Mar. 1941 

64 

— 

— 

Apr. 1941 

64 

— 

— 

May 1941 

65 

— 

— 

Jun. 1941 

80 

— 

— 

Jul. 1941 

70 

65 

56 

Aug. 1941 

74 

— 

— 

Sep. 1941 

72 

— 

— 

Oct. 1941 

68 

— 

— 

Nov. 1941 

67 

— 

— 


Source: “Oil, Ministerial Report,” USSBS, Fig. 17; “Oil, Final Report,” USSBS, 54; and Mark Harrison, 
“Resource Mobilization for World War II: TheU.S.A,U.K.,U.S.S.R., and Germany, 1938-1945,” 
Economic History Review, 41, no. 2 (May 1988): 84. 






Tables of Statistical Information 207 


Table 4.1 

German Total Overseas Exports Versus Exports via the USSR in Thousands of Tons, 
1940-41 20 



Total Overseas Exports 

Exports via the USSR 

USSR as Percentage 

Feb. 1940 

151.8 

0.7 

0.5 

Mar. 1940 

222.1 

1.5 

0.7 

Apr. 1940 

15.5 

3.5 

22.6 

May 1940 

16.3 

2.6 

15.8 

Jun. 1940 

7.6 

2.2 

29.4 

Jul. 1940 

7.1 

5.0 

71.2 

Aug. 1940 

4.4 

3.1 

69.7 

Sep. 1940 

6.6 

5.0 

76.0 

Oct. 1940 

5.6 

4.2 

74.5 

Nov. 1940 

11.6 

6.1 

53.1 

Dec. 1940 

11.0 

6.8 

61.5 

Jan. 1941 

7.4 

4.2 

56.8 

Feb. 1941 

9.6 

6.7 

69.9 

Mar. 1941 

9.1 

5.5 

59.1 

Apr. 1941 

5.1 

3.0 

58.4 

May 1941 

4.9 

2.8 

58.2 

Jun. 1941 

11.1 

3.0 

27.3 

Jul. 1941 

2.4 

1.1 

47.4 

Aug. 1941 

3.2 

0.8 

24.8 

Sep. 1941 

4.3 

0.0 

0.3 

Oct. 1941 

4.2 

0.0 

0.0 


Source: BAMA/OKW/WiRu Amt/VO, “Berichte des Verb. Offz. (Oberst Drews) zum RWM1940-1941 
RW 45/14-15. 






208 Appendix A 

Table 4.2 

German Total Overseas Imports Versus Imports via the USSR in Thousands of Tons, 
1940-41 



Total Overseas Imports 

Imports via the USSR 

USSR as Percentage 

Feb. 1940 

21.1 

0.0 

0.0 

Mar. 1940 

24.5 

0.0 

0.2 

Apr. 1940 

25.0 

0.2 

0.8 

May 1940 

19.9 

0.3 

1.6 

Jun. 1940 

20.5 

7.6 

37.2 

Jul. 1940 

17.4 

13.2 

76.1 

Aug. 1940 

20.4 

11.1 

54.2 

Sep. 1940 

50.2 

43.0 

85.7 

Oct. 1940 

37.1 

31.7 

85.3 

Nov. 1940 

41.1 

23.6 

57.4 

Deo. 1940 

48.5 

33.4 

68.9 

Jan. 1941 

43.8 

33.1 

75.5 

Feb. 1941 

48.0 

31.4 

65.3 

Mar. 1941 

53.5 

33.4 

62.4 

Apr. 1941 

65.3 

41.0 

62.8 

May 1941 

69.0 

52.9 

76.7 

Jun. 1941 

53.2 

35.2 

66.2 

Jul. 1941 

103.8 

34.6 

33.3 

Aug. 1941 

77.7 

7.1 

9.2 

Sep. 1941 

58.5 

5.8 

9.9 

Oct. 1941 

56.5 

1.0 

1.7 


Source: BAMA/OKW/WiRuAmt/VO, “Berichfe des Verb. Oflz. (Oberst Drews) zumRWM 1940-1941,” 
RW45/14-15. 






Tables of Statistical Information 209 


Table 4.3 

German Trade via the Trans-Siberian Railroad in Thousands of Tons, 1940-41 
(Soviet Figures) 




1940 

1941 (5 months) 

Soya Beans 


58.5 

109.4 

Whale and Fish Oil 


56.7 

46.2 

Rubber 


4.5 

14.3 

Fats 


2.1 

2.9 

Nuts 


9.3 

12.2 

Tea 


3.3 

4.8 

Tinned Food 


5.0 

3.8 

Copper 


2.0 

2.8 

Oil Seeds 


0.5 

1.9 

Japanese Peas 


5.1 

0.0 

Others 


19.2 

14.1 

Total 


166.2 

212.4 

Source: Medlicott, 1: 669-70. 




Table 4.4 




German Trade via the USSR with Afghanistan and Iran in 

Thousands of Tons, 

1939-41 (Soviet Figures) 





1939 

1940 

1941 (5 months) 

Textiles 

0 

19 

17 

Dried Fruits 

8 

42 

8 

Legumes 

0 

7 

2 

Other Items 

0 

2 

0 


Source: Medlicott, 1: 670-71. 










210 Appendix A 


Table 5.1 

Planned Soviet Exports to Germany for August 19, 1939, to August 18, 1941 21 



August 19, 1939, Treaty 

February 11, 1940, Treaty 

Other Agreements 

Albumin 

— 

150,000 RM 

— 

Animal Hair 

2,000,000 RM 

— 

? 

Arsenic 

— 

2,250,000 RM 

_ 

Asbestos 

3,000 tons 

15,000 tons 

— 

Bed Feathers 

2,480,000 RM 

— 

— 

Bladders 

120,000 RM 

— 

— 

Bristles 

3,600,000 RM 

— 

— 

Carpets 

— 

— 

366,900 RM 

Castor Oil 

— 

— 

10,000 tons 

Chrome Ore 

— 

150,000 tons 

— 

Cobalt 

— 

3,000 kilograms 

— 

Copper 

— 

11,000 tons 

59,000 tons 

Cotton 

14,000 tons 

137,300 tons 

— 

Cotton: Waste 

8,100 tons 

5,300 tons 

— 

Ether 

— 

1,050,000 RM 

— 

Flax 

5,600 tons 

14,400 tons 

— 

Flax: Waste 

2,700 tons 

— 

— 

Glands 

— 

975,000 RM 

— 

Glimmer 

— 

300,000 RM 

— 

Glue 

— 

300 tons 

— 

Glycerine 

— 

300 tons 

— 

Grains & 
Legumes 

117,100 tons 

1,401,800 tons 

— 

Herbs 

1,600,000 RM 

750,000 RM 

— 

Horn Materials 

— 

375,000 RM 

— 

Intestines 

— 

9,000,000 RM 

— 





Tables of Statistical Information 211 



August 19, 1939, Treaty 

February 11, 1940, Treaty 

Iodine 

— 

975,000 RM 

Iridium 

— 

72 kilograms 

Iron: Ore 

— 

750,000 tons 

Iron: Raw 

— 

150,000 tons 

Iron: Scrap 

— 

300,000 tons 

Linseed Oil 

600,000 RM 

— 

Liquorice 

— 

375,000 RM 

Manganese 

83,500 tons 

37,500 tons 

Molybdenum 

— 

500 tons 

Morphine, etc. 

— 

1,500,000 RM 

Nickel 

— 

3,000 tons 

Oil Seed Cake 

5,400 tons 

— 

Oil Products 

63,800 tons 

1,308,000 tons 

Phosphates 

475,000 tons 

450,000 tons 

Pine Oil 

— 

330,000 RM 

Platinum 

413 kilograms 

3,288 kilograms 

Rags 

700,000 RM 

1,500,000 RM 

Resins 

700,000 RM 

— 

Rubber 

— 

— 

Seeds 

— 

225,000 RM 

Shale Oil 

23,000 tons 

6,700 tons 

Sheep Skins 

— 

— 

Sulphur 

14,000 tons 

21,000 tons 

Terpentine 

— 

1,750,000 RM 

Tin 

— 

1,000 tons 

Tobacco & Furs 

9,600,000 RM 

4,800,000 RM 


(Table 5.1 cont.) 


Other Agreements 


500,000 RM 


110,000 tons 


100 tons 


300,000 tons 


1,300 tons 


1,900 tons 


300 tons 





212 Appendix A 


(Table 5.1 cont.) 



August 19, 1939, Treaty 

February 11, 1940, Treaty 

Other Agreements 

Tobacco 

Powder 

— 

— 

1,000 tons 

Wolfram 

— 

500 tons 

— 

Wood 

75,500,000 RM 

27,000,000 RM 

— 

Wood Tar 

— 

15,000 RM 

— 


Source: BA/RK/RA, “Kaufabschliisse ab 19. August 1939 bis 10. Juli 1940,” R43/II/1940, 2Iff. 






Tables of Statistical Information 213 


Table 5.2 

Negotiators and Transfer Points for Soviet Exports to Germany, 1939-40 



German Buyer 

Soviet Seller 

Transfer Points 

Albumin 

E&C Kreuzberger 

Rasnoexport 

— 

Animal Hair 

Kiwus & Mogk 

Rasnoexport 

Stettin, Leningrad, Bremen 

Arsenic 

Igerussko 

— 

— 

Asbestos 

Becker & Haag 

Soyuspromexport 

Leningrad 

Bed Feathers 

Kunsemuller & Co. 

Rasnoexport 

Hamburg, Stettin, Przemysl 

Bladders 

Igerussko, O. Bruckner 

Exportles 

Leningrad 

Bristles 

J. L. Graubner, P. 
Schneider 

Rasnoexport 

Stettin 

Carpets 

Persische A. G. 

Rasnoexport 

Leningrad 

Castor Oil 

Otto Aldag 

Rasnoexport 

Novosserk 

Chrome Ore 

Elektrometal. 

Soyuspromexport 

— 

Cobalt 

— 

— 

— 

Copper 

— 

— 

— 

Cotton 

Albrecht, M.-P., & Co. 

Exportlyon 

Leningrad, Border 

Cotton: Waste 

Degen. & Otto, Bunzl & 
Biach 

Exportlyon 

Leningrad, Border 

Ether 

O. Bruckner 

Rasnoexport 

Stettin 

Flax 

Ernst Schulz 

Exportlyon 

Leningrad, Border 

Flax: Waste 

Ernst Schulz 

Exportlyon 

Stettin, Border 

Glands 

Igerussko 

Rasnoexport 

Leningrad, Border 

Glimmer 

Rohrs & Co. 

Soyuspromexport 

— 

Glue 

Deutsche Handels 

Rasnoexport 

— 

Glycerine 

Otto Aldag 

Soyuspromexport 

Leningrad 

Grains 

Reichstelle fur Getreide 

Exportkleb 

Przemysl, Povstken, 
Terespol 

Herbs 

Brenntag 

— 

Border 

Horn 

Materials 

Homimport K.-G. 

Rasnoexport 

Stettin 





214 Appendix A 


(Table 5.2 cont.) 



German Buyer 

Soviet Seller 

Transfer Points 

Intestines 

Berthold RolfF, Haberecht 
& Wiirz 

Rasnoexport 

Stettin, Leningrad 

Iodine 

Igerussko 

Soyuspromexport 

Stettin, Hamburg 

Iron Ore 

Stahlwerke 

Soyuspromexport 

— 

Iron: Raw 

Krupp, Johst 

— 

— 

Iron: Scrap 

Stahlwerke 

Soyuspromexport 

— 

Linseed Oil 

Otto Aldag 

Exportkleb 

— 

Liquorice 

Bruckner, A. G. Chem. 

Rasnoexport 

Stettin, Hamburg 

Manganese 

Stahlverein 

Soyuspromexport 

— 

Molybdenum 

— 

— 

— 

Morphine, etc. 

Six Companies 

Rasnoexport 

Stettin, Border 

Nickel 

— 

— 

— 

Oil Seed Cake 

Reichstelle fur Getreide 

Exportkleb 

Przemysl, Povstken, 
Terespol 

Oil Products 

A. G. Chem., Brenntag, M- 
E GmbH 

S oyuspromexport 

Przemysl, Batum, Baltic 
Ports 

Phosphates 

Igerussko, Stahlverein 

Soyuspromexport 

Trangsund, Leningrad 

Pine Oil 

Brenntag 

Rasnoexport 

Leningrad 

Platinum 

Heraeus 

Soyuspromexport 

Moscow 22 

Rags 

Bunzl & Biach 

Exportlyon 

Stettin, Border 

Resins 

Igerussko 

Soyuspromexport 

— 

Rubber 

— 

— 

— 

Seeds 

A G. Chem. 

— 

Border 

Shale Oil 

Igerussko, Jenquel & Hayn, 
E. Diemar 

Soyuspromexport 

Poti 

Sheep Skins 

Four Companies 

Rasnoexport 

Leningrad 

Sulphur 

Igerussko 

Soyuspromexport 

— 

Terpentine 

Brenntag, Igerussko 

Rasnoexport 

Leningrad 

Tin 

_ 

_ 

_ 





Tables of Statistical Information 215 


(Table 5.2 cont.) 



German Buyer 

Soviet Seller 

Transfer Points 

Tobacco & 

Furs 

Theodor Thorer 

Soyuspuschnina 

Leipzig 

Tobacco 

Powder 

Bigot & Co. 

Rasnoexport 

Leningrad 

Wolfram 

— 

— 

— 

Wood 

Ten Companies 

Exportles 

Leningrad, Border 

Wood Tar 

Brenntag 

Soyuspromexport 

Leningrad 


Source: BA/RK/RA, “Kaufabschltisse ab 19. August 1939 bis 10. Juli 1940 R43/II/1940, 21ff. 






216 Appendix A 


Table 5.3 

Terms of Trade Agreements for Soviet Items Exported to Germany, 1939-40 23 



Dates 

Tons 

Avg. RM/Ton 

Relative to 
Market 

Total in RM 

Albumin 24 

— 

- 

— 

— 

— 

Animal 

Hair 25 

10/25/39- 

4/7/40 

1,575 

Varies 

0-16% > 

3,769,500 

Arsenic 26 

— 

— 

— 

— 

— 

Asbestos 27 

12/22/39 

7/2, 7/8, 

3,000 

360 

40%> 

128,000 


7/9/40 

14,003 

300 

20%> 

4,000,000 

Bed 

11/14/39 

100 

3,500 

0%> 

350,000 

Feathers 28 

3/31/40 

150 

3,500 

0%> 

630,000 


6/24/40 

50-60 

3,900 

12%> 

250,000 

Bladders 

10/26/39 

1.1 

12-21 

0%> 

18,000 


6/14/40 

2.9 

15 

0%> 

43,400 

Bristles 29 

10/17/39 

5/25/40 

100 

110 

Varies 

0%> 

17.5%> 

998,000 

1,332,000 

Carpets 

10/14, 

10/19/39 

— 

— 

— 

366,900 

Castor Oil 30 

3/20, 

6/16/40 

10,000 

$220 

30%< 

— 

Chrome 

Ore 31 

8/7/40 

20,000 

— 

— 

— 

Cobalt 

— 

— 

— 

— 

— 

Copper 

4/28, 

8/20/40 

— 

— 

— 

— 

Cotton 32 

12/11/39 

97,500 

824-992 

0%> 

85,204,000 


10/7/40 

1,220 

— 

— 

— 

Cotton: 

Waste 

8/25/39- 

5/16/40 

10,000 

Varies 

30%< 

2,750,000 

Ether 

up to 
1/5/40 

139.3 

Varies 

0-20%> 

1,345,000 

Flax 33 

12/1/39 

1,000 

1,442 

25%> 

1,356,000 


6/5/40 

9,113 

1,442 

25%> 

5,000,000 

Flax: 

Waste 34 

8/7/39- 

12/1/39 

10,392 

3-500 

12.5%> 

5,000,000 

Glands 

6/2/40 

112 

Varies 

65%> 

141,000 





Tables of Statistical Information 217 


(Table 5.3 cont.) 



Dates 

Tons 

Avg. RM/Ton 

Relative to 
Market 

Total in RM 

Glimmer 35 

— 

— 

— 

700+%> 

— 

Glue 36 

— 

— 

— 

— 

— 

Glycerine 37 

4/12/40 

250 

1,000 

20%> 

250,000 

Grains & 
Legumes 38 

10/26/39 

4/30, 

5/15/40 

7/24/40 

171,232 

810,000 

4,400 

115-30 

115-30 

0%> 

8%> 

23,620,000 

98,800,000 

Herbs 

3/12/40 

397.7 

Varies 

0-20%> 

405,000 

Horn 

Materials 

12/7/39, 

5/24/40 

680 

110-18 

0-?%> 

76,100 

Intestines 

9/11/39- 
5/29/40 
9/29/39- 
6/20/40 

7,400 bis 

21,000 

bis 

Varies 

0%> 

3.25%> 

2,283,000 

6,000,000 

Iodine 39 

11/10/39 

50-60 

13,000 

I75%> 

650,000 

Iridium 

5/28/40 

24 kgs 

19,000,000 

25%> 

463,000 

Iron: Ore 40 

— 

— 

— 

— 

— 

Iron: Raw 41 

— 

— 

— 

— 

— 

Iron: Scrap 42 

— 

— 

— 

— 

— 

Linseed Oil 43 

— 

— 

— 

— 

— 

Liquorice 44 

8/19/39- 

2/14/40 

1,150 

Varies 

Varies 

300,000 +/- 

Manganese 45 

7/11/40 
8/14/40 

80,000 

55,000 

45+/- 
45 +/- 

— 

3,600 

2,400 

Molybdenum 

— 

— 

— 

— 

— 

Morphine, etc. 

10/9/39- 

7/4/40 

59.3 

Varies 

Varies 

709,700 

Nickel 

4/28, 

8/20/40 

1,531.5 

— 

— 

— 

Oil Seed Cake 

1/17/40 

25,000 

150-55 

0%> 

3,700,000 





218 Appendix A 


(Table 5.3 cont.) 



Dates 

Tons 

Avg. RM/Ton 

Relative to 
Market 

Total in RM 

Oil 

11/39 

1,800 

260 

200%> 

540,000 

Products 46 

12/18/39 

108,200 

260 

200%> 

13,000,000 


5/25, 

5/26/40 

801,200 

Varies 

50%> 

85,000,000 

Phosphates 47 

12/1/39 

500,000 

27 

0-?%< 

12- 

12/2/39 

130,000 

17 

0-?%< 

15,000,000 

2,190,000 

Pine Oil 

8/23/39 - 
2/3/40 

60 

4,000-4,500 

0-13%> 

245,000 

Platinum 

1/20- 

5/22/40 

2,400 kgs 

5,000,000 

33.3%> 

11,522,000 

Rags 48 

9/20/39- 

5/21/40 

6,750 

Varies 

0%> 

1,284,000 

Resins 49 

— 

— 

— 

— 

— 

Rubber 

8/22/40 

1,309 

— 

— 

— 

Seeds 

6/17/40 

20.7 

Varies 

0-20%> 

40,000 

Shale Oil 50 

12/39 

500 

112 

12%> 

56,000 


3/26/40 

6,000 

112 

12%> 

672,000 


5/22, 

7/2/40 

15,000 

112 

12%> 

1,680,000 

Sheep Skins 

9/10, 

11/21/39 

1,911 

Varies 

0-14%> 

2,898,000 

Sulphur 51 

6/23/40 

28,000 

142.5 

6%> 

4,000,000 

Terpentine 52 

12/31/39 

500 

400 

30%> 

200.000 

6/7/40 

3,000 

455 

70%> 

1,365,000 

Tin 

4/28, 

8/20/40 

785 

— 

— 

— 

Tobacco & 
Furs 53 

up to 
7/10/40 

— 

Varies 

15%> 

4,200,000 

Tobacco 

Powder 

10/20/39 

1,000 

$19 

0%> 

69,000 

Wolfram 

— 

— 

— 

— 

— 

Wood 54 

up to 
8/30/40 

— 

Varies 

0-10%> 

39,378,000 

Wood Tar 55 

5/30/40 

10 

600 

0%> 

6,000 


Source: BA/RK/RA, “Kaufabschliisse ab 19. August 1939 bis 10. Juli 1940 R43/II/1940, 21ff. 





Tables of Statistical Information 219 


Table 5.4 

Planned Versus Actual Soviet Exports to Germany, 1939-41 56 



Planned by Aug. 1941 

Contracted by Oct. 1940 

Delivered by Aug. 1941 

Albumin 

150,000 RM 

— 

— 

Animal Hair 

2,000,000 RM 

3,769,500 RM 

_ 


— 

1,575 tons 

2,200 tons 

Arsenic 

2,250,000 RM 

— 

— 

Asbestos 

18,000 tons 

14,300 tons 

18,600 tons 

Bed Feathers 

2,480,000 RM 

1,280,000 RM 

_ 


— 

300 tons 

400 tons 

Bladders 

120,000 RM 

61,400 RM 

— 

Bristles 

3,600,000 RM 

2,330,000 RM 

_ 


— 

210 tons 

100 tons 

Carpets 

— 

366,900 RM 

— 


— 

— 

100 tons 

Castor Oil 

— 

1,000,000 tons 

— 

Chrome Ore 

150,000 tons 

20,000 tons 

23,400 tons 

Cobalt 

3,000 kilograms 

— 

— 

Copper 

16,900 tons 

11,000 tons 

— 

Cotton 

151,300 tons 

98,700 tons 

139,500 tons 

Cotton: Waste 

13,400 tons 

10,000 tons 

— 

Ether 

1,050,000 RM 

1,345,000 RM 

_ 


— 

139.3 tons 

200 tons 

Flax 

20,000 tons 

10,100 tons 

27,300 tons 

Flax: Waste 

2,700 tons 

10,400 tons 

1,000 tons 

Glands 

975,000 RM 

141,000 RM 

— 

Glimmer 

300,000 RM 

— 

_ 


— 

— 

900 tons 

Glue 

300 tons 

— 

— 

Glycerine 

300 tons 

300 tons 

3,900 tons 

Grains & 
Legumes 

1,518,800 tons 

985,600 tons 

1,691,900 tons 




220 Appendix A 


(Table 5.4 cont.) 



Planned by Aug. 1941 

Contracted by Oct. 1940 

Delivered by Aug. 1941 

Herbs 

2,350,000 RM 

405,000 RM 
398 tons 

3,000 tons 

Horn 

375,000 RM 

76,100 RM 


Materials 

— 

680 tons 

1,900 tons 

Intestines 

9,000,000 RM 

8,283,000 RM 

5,400 tons 

Iodine 

1,475,000 RM 

650,000 RM 

— 

Iridium 

72 kilograms 

24 kilograms 

— 

Iron: Ore 

750,000 tons 

— 

— 

Iron: Raw 

150,000 tons 

— 

— 

Iron: Scrap 

300,000 tons 

— 

— 

Linseed Oil 

600,000 RM 

— 

— 

Liquorice 

375,000 RM 

300,000 RM 

— 

Manganese 

231,000 tons 

135,000 tons 

165,200 tons 

Molybdenum 

500 tons 

— 

— 

Morphine, etc. 

1,500,000 RM 

709,700 RM 

— 

Nickel 

3,000 tons 

1,500 tons 

— 

Oil Seed Cake 

54,200 tons 

25,000 tons 

51,200 tons 

Oil Products 

1,371,800 tons 

911,200 tons 

941,700 tons 

Phosphates 

925,000 tons 

630,000 tons 

202,300 tons 

Pine Oil 

330,000 RM 

245,000 RM 

— 

Platinum 

3,701 kilograms 

2,400 kilograms 

— 

Rags 

1,700,000 RM 

1,284,000 RM 
6,750 tons 

10,000 tons 

Resins 

700,000 RM 

— 

— 

Rubber 

1,300 tons 

1,300 tons 

— 

Seeds 

225,000 RM 

40,000 RM 

— 

Shale Oil 

29,700 tons 

21,500 tons 

— 

Sheep Skins 

— 

2,898,000 RM 

— 





Tables of Statistical Information 221 


(Table 5.4 cont.) 



Planned by Aug. 1941 

Contracted by Oct. 1940 

Delivered by Aug. 1941 

Sulphur 

3,500,000 tons 

2,800,000 tons 

— 

Terpentine 

1,750,000 RM 

1,565,000 RM 
3,500 tons 

2,900 tons 

Tine 

1,300 tons 

800 tons 

— 

Tobacco & 

14,400,000 RM 

4,200,000 RM 


Furs 

— 

1,900 tons 

Tobacco 

Powder 

— 

1,000 tons 

1,500 tons 

Wolfram 

500 tons 

— 

— 

Wood 

102,500,000 RM 

39,378,000 RM 

1,227,600 tons 

Wood Tar 

15,000 RM 

600 RM 

— 


Source: Medlicott, 1: 667-68. 






222 Appendix A 


NOTES 

1. Note that the 1934 and 1935 figures for imports from the USSR were later 
revised by the Rufilandausschufi to 223 and 202 million RM, respectively. Though other 
authors also cite these same reports, there remain differences over exact totals for Soviet 
trade during the first six months of 1941. Ferdinand Friedensburg, “Die sowjetischen 
Kriegslieferungen an das Hitlerreich,” Vierteljahrshefte zur Wirtschaftsforschung (1962): 
333, mistakenly cites the year-end figures as the six-month totals! Furthermore, the six- 
month German export total of 276 million RM one finds by adding the individual 
categories he lists on page 337 is already 7 million RM over the year-end figure of 269 
million RM. Gerhard Eichler, Die deutsch-sowjetischen Wirtschaftsbeziehungen (Ph.D. 
diss., Halle, 1965), 284, on the other hand, estimates imports at 205.9 million RM and 
exports at 234.5 million RM by adding individual categories instead of using the overall 
figures. Finally Heinrich Schwendemann, Die wirtschaftliche Zusammenarbeit zwischen 
dem Deutschen Reich und der Sowjetunion von 1939 bis 1941 (Berlin: Akademie Verlag, 
1993), 367, uses these reports second-hand through the notices sent to Oberst Drews in the 
WiRiiAmt and lists imports at 251 million RM and exports at 265 million RM (which 
includes a gold payment of 45 million RM). 

2. BA/RFM, “Obersicht tiber den deutsch-russischen Waren- und 
Zahlungsverkehr,”R 2/17307, contains similar import and export information in two 
aditional forms: “Reports of Government Agencies” and “Payments to Banks.” These lists 
show higher numbers at earlier dates than the DerAufienhandel reports because they reflect 
when shipments either left Soviet hands (and were reported to German agencies) or when 
the Germans ordered their goods (and had to pay up front, unlike the USSR which paid 
upon receipt) instead of when shipments crossed German tariff borders. However, these 
figures are less complete, result in wildly fluctuating month-to-month totals, and are 
ultimately less meaningful because both sides could always delay or renege on earlier deals 
reflected in these alternate statistics. See Schwendemann, 368, for the opposing argument. 

Note also that all these import statistics continued for months, and actually for years, 
after the invasion began. Apparently, the Germans counted as imports items that were 
confiscated during the occupation as long as these goods fell under the provisions of earlier 
treaties or of agreements signed with the new puppet governments. 

3. As explained in more detail in Appendix B, the “Trade” provisions of the 
August 19, 1939, treaty required the Germans to provide the Soviets with 90 million RM 
of orders by August 19, 1940, and 180 million RM of orders by August 19, 1941. The 
“Credit” provisions required the Germans to provide 120 million RM of orders by August 
19,1940, and 200 million RM of orders by August 19,1941. The February 11,1940, treaty 
required the Germans to send 170 million RM of goods to the USSR by August 11,1940, 
340 million RM by February 11,1941, and 425 million RM by May 11,1941. In December 
1940, this 425 million RM total was revised to 338 million RM. The January 10, 1941, 
treaty did not oblige the Germans to send any shipments in addition to those under the 
February 11,1940, agreement until after May 11, 1941. The Germans, however, did have 
a special agreement from December 1940 to pay 23 million RM in gold for Bessarabian 
agricultural products. I have calculated percentages for the January 10,1941, treaty against 
this 23 million RM figure. 

4. The August 19,1939, treaty required the Soviets to send 90 million RM of goods 
by August 19, 1940, and 180 million RM by August 19, 1941. The February 11, 1940, 
treaty required the Soviets to provide 212.5 million RM by August 11, 1940, and 425 
million RM by February 11, 1941. hi December 1940, this last figure was revised to 338 



Tables of Statistical Information 223 


million RM. Finally, the January 10,1941, treaty called for the Soviets to send 115 million 
RM by May 11, 1941. 

5. Note that platinum is given in tons and includes iridium shipments. 
BAMA/OKW/WiRuAmt/Stb, “Kriegswirtschaftlicher Lagebericht,” RW19/99, 28a, gives 
somewhat different figures for February through May of 1941: oil—93.8 thousand tons, 
copper—1.4, nickel—0.3, tin—0.1, and manganese—5.9. 

6. By way of comparison, Vneshnyaya Torgovlya gives the following totals in 
millions of rubles for the years 1938-1940: oil—2.9,2.6,102.9; manganese—3.7,1.3,9.2; 
chemicals—2.0, 0.7, 11.4. 

7. Percentages are calculated on the basis of thousands of tons, except for platinum, 
chemical goods, dyes and colors, and phosphates, which are calculated on the basis of 
millions of RM because of the variety of items included under these categories (such as the 
very expensive iridium included in the platinum totals). 

8. BAMA, RW 19/99, 28a, gives somewhat different figures for the months from 
February to May of 1941: grains and legumes at 587,400 tons and oil cake at 10,400 tons. 

9. Vneshnyaya Torgovlya estimates as follows for the years 1938-1940 in millions 
of rubles: grains—0.2,1.0,168.1; legumes—0.7, 6.3, 16.0; oil cake—0.0, 0.0, 7.7. 

10. Percentages calculated on the basis of millions of RM. 

11. These Soviet totals do not always compare exactly with those given in 
Statistische Jahrbucher. In this and in most other cases where there are both German and 
Soviet trade figures, the Soviet numbers are slightly higher, usually because of more liberal 
bookkeeping procedures. Medlicott also notes that a comparison of these Soviet figures 
with Britain’s Ministry of Economic Warfare estimates shows the general accuracy of the 
Ministry’s estimates. Unfortunately, Medlicott’s own accuracy in adding these Soviet 
figures is somewhat off on page 658, though the numbers in “Economic Warfare,” in 
Survey of International Affairs, 1939-1946: The War and the Neutrals, eds. Arnold 
Toynbee and Veronica Toynbee (London: Oxford University, 1956), 38, have been 
corrected. 

12. Naval equipment is counted in individual pieces instead of in thousands of tons. 
Eichler’s figures for coal (page 291) have the decimal point moved over one place, so his 
numbers are too low. 

13. Vneshnyaya Torgovlya gives the following numbers in millions of rubles for the 
years 1938-1940: coal—0.0,0.0,64.0; machine tools—31.5,334.5,149.7; chemicals—5.8, 
1.2, 9.9; electrical goods—1.8, 1.3, 28.9; naval equipment—0.0, 0.0, 27.1. 

14. All percentages calculated on the basis of millions of RM a year. 

15. These reports calculate their figures based on when oil shipments left Soviet 
hands-by land at Przemysl and Terespol, by the Black Sea at Batum, and by the Baltic at 
Leningrad, Tallinn, Reval, and Riga. Hartmut Schustereit, “Die Mineralollieferungen der 
Sowjetunion an das Deutsch Reich 1940/41,” Vierteljahrsschrift fur Sozial- und 
Wirtschaftsgeschichte 67 (1980): 347, double counts some 1941 Black Sea shipments that 
had been temporarily delayed in Constanza. Consequently, his “Black Sea” numbers for 
February to May of 1941 are slightly higher than those listed above: 34.2, 6.7, 24.5, and 
47.7 thousand tons, respectively. 

16. Soviet imports are taken from the WiRuAmt report that counts shipments that 
crossed the German border and therefore overlooks some of the stocks that were captured 
or used in foreign countries. Other estimates, therefore, while less complete, offer higher 
totals, ranging up to a total of 1 million tons higher that the Soviet Union provided to the 
Axis cause. 

Fuel stocks are adapted from the two USSBS reports. Unfortunately, these charts only 



224 Appendix A 


include stocks of aviation, motor, and diesel fuels and ignore stocks of fuel and lubricating 
oils. The USSBS gives the following estimates in tons for these items: fuel oil—810,00 
(August 1939), 300,000 (August 1940); lubricating oil-138,000 (August 1939), 228,000 
(January 1940), 196,000 (January 1941), and 162,000 (January 1942). Stocks of other 
petroleum products appear to have been minimal. In general, these figures show aviation, 
motor, and diesel fuels to have have been about 80 to 85 percent of total stocks (I have used 
82 percent throughout). The estimated levels given for all stocks, therefore, are only a guide 
to the overall German oil situation, but the end result without Soviet oil exports would 
probably have fallen somewhere in between the two sets of data shown in the table. 

17. There is some confusion about the amount of rubber that transited the Soviet 
Union. Medlicott estimates 18,800 based on Soviet figures. The “Ministerial Report on 
German Rubber Industry,” in USSBS, 1945 (Washington D.C.: GPO, 1947), 16, puts the 
total via the USSR at 16,000 tons. On the other hand, Robert Goralski and Russell 
Freeburg, Oil & War: How the Deadly Struggle for Fuel in WWII Meant Victory or Defeat 
(New York: William Morrow, 1987), 66, state that the famous express train that crossed 
the German border at midnight on June 22, 1941, contained 21,000 tons of raw rubber by 
itself, instead of the 2,100 tons it actually carried! 

18. Imports from the USSR include shipments from the Baltics after these countries 
were occupied by the USSR in July 1940. As usual, the statistics from Der Aufienhandel 
Deutschlands are conservative compared to Soviet and other internal German figures, 
which estimate Soviet grain shipments at a few hundred thousand tons higher. 

19. These oil and especially rubber figures are probably too low because German 
exports of these materials were counted under civilian consumption. “Much of this 
exported rubber, however, was subsequently reimported or supplied to the Wehrmacht 
outside Germany,” according to “Effects,” USSBS, 84. Finally, much of the remaining 
export went to the armed forces of Axis allies. For further figures on rubber consumption, 
see BAMA/OKW/WiRuAmt/Dr, Hedler, “Kautschuk und die Versorgungslage im Kriege, 
1941 RW19/1467, Anlage 10. 

20. The various monthly reports list total exports and the amounts that crossed the 
Lithuanian-Soviet-Polish border until July 1940, and the newly formed Soviet-Polish border 
thereafter. 

21. None of the figures from Tables 5.1 to 5.4 include transit shipments or other 
services rendered by the Soviets. Note also that BAMA/OKWAViRiiAmt/Ro, 
“Vortragsnotiz: Das deutsch-sowjetische Wirtschaftsabkommen 11.2.40,” Wi/ID.2l , 61, 
offers somewhat higher figures for the amounts due under the August 19 credit agreement: 
cotton at 30,800 tons, grain at 352,700 tons, and platinum at 860 kilograms. 

22. Platinum and iridium were flown to Germany from Moscow. 

23. The report from which most of these tables are constructed does not include 
information for contracts reached after July 10,1940. 

24. A November 28, 1939, Soviet offer was later raised, and no agreement was 
reached. 

25. The two reached a special agreement for the extra amount above two million 

RM. 

26. Packing questions kept any treaty from being concluded. 

27. The July 2, 1940, treaty for 12,000 tons was apparently never ratified, though 
the totals shipped would seem to include tonnage from this agreement. 

28. The Russia Committee reported that the Soviets had exhausted their export 
potential at 300 to 350 tons a year. 



Tables of Statistical Information 225 


29. For the May 25, 1940, treaty, the Soviets had demanded a 50 percent price 
increase. 

30. This low price was intended to balance the high price for glycerine. Note that 
the price is in American dollars. 

31. Transportation costs delayed the negotiations. 

32. TheWiRuAmt dates the main treaty on February 12, 1940. Note that these 
delivery totals apparently included some waste cotton as well. 

33. The WiRiiAmt lists the December 1,1939, agreement as 915 tons. 

34. The Germans requested and received an additional 8,000 tons because of the 
good prices for this item. 

3 5. The Germans complained of high prices and low quality. 

36. An offer had been expected by July 1, 1940, but apparently never materialized. 

37. Low resin oil and castor oil prices were intended to balance this high cost. 

38. Transportation costs are listed as 7 to 9 RM per ton. The Russia Committee 
complained repeatedly about lagging Soviet deliveries. 

3 9. The Soviets had originally asked for 21,000 RM per ton. 

40. High Soviet prices and the German capture of the iron ore mines in Lothringen, 
France, scuttled these talks. 

41. See note 19 for Appendix A. 

42. The Russia Committee was apparently on the verge of completing a treaty for 
200,000 tons, but the agreement was never concluded. 

43. High Soviet prices resulted in no treaty being reached by July 10, 1940. 

44. The main treaty was signed on February 14,1940. 

45. The Russia Committee had initially been hoping for agreements totaling 200,000 
tons instead of the 135,000 tons in the two main treaties. There was a special accord signed 
later, however, that added another 110,000 tons. 

46. The Germans also initially paid the Rumanians 200 percent over pre-war market 
prices. Note that the WiRiiAmt lists the November 1939 oil treaty on February 7 and 
February 15, 1940. 

47. The Russia Committee was concerned about planned steamer transportation 
costs of 27.5 to 43 pfennig per ton. 

48. The main treaty was signed on November 22, 1939. 

49. There was still no Soviet offer as of July 10,1940. 

50. The WiRiiAmt dates the July 2,1940, treaty from June 25; counts 5,305 tons for 
the May 22, 1940, agreement; and ignores the December 1939 arrangement. 

51. This treaty had yet to be officially signed as of November 1,1940. 

52. The June 1940 agreement had yet to be officially signed as of July 10,1940. 

53. Freight and insurance costs added 2 percent to the final price. 

54. The Russia Committee noted occasional problems with transportation costs. 

55. Packing costs added 15 percent to the final price. 

56. Since the figures for shipments planned and contracted for are from German 
sources and the figures for shipments actually delivered are from Soviet sources, the 
comparisons are not always exact or complete. 



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Appendix B: German-Soviet 
Economic Treaties 


CREDIT AGREEMENT OF AUGUST 19,1939 

Representatives of the Government of the German Reich and representatives 
of the Government of the Union of Soviet Socialist Republics have conducted 
negotiations with each other on placing additional Soviet orders in Germany, and 
have come to the following agreement: 

Article 1 

(1) The Government of the Union of Soviet Socialist Republics will cause the 
Trade Delegation of the U.S.S.R. in Germany, or the importing organizations of 
the U.S.S.R., to place additional orders to the amount of 200 million Reichsmark 
with German firms. 

(2) The additional orders shall be placed exclusively for supplies for capital 
investment purposes, that is in particular for: Equipment of factories. Installations, 
Fittings of various kinds, Machinery and machine tools of all kinds. Construction 
of apparatus. Equipment for the naphtha industry, Equipment for the chemical 
industry, Products of the electro-technical industry, Ships, Vehicles, Means of 
transport, Measuring instruments, Laboratory equipment. 

(3) The usual spare parts for such supplies are also included. There are further 
included contracts for technical assistance and bringing installations into 
operation, where these are stipulated in connection with orders placed under this 
Credit Agreement. 

(4) The value of individual orders shall not be less than 50,000 Reichsmark. 

(5) Not included in the additional orders, are orders for so-called current 
business. Such are, in particular: Raw materials, Semi-finished products. Spare 
parts (other than those mentioned in paragraph 3), Chemical products. Consumer 
goods. Articles of daily use. 



228 Appendix B 


(6) The Trade Delegation and the importing organizations shall be free in the 
choice of firms when placing orders. German firms shall likewise be free to decide 
whether, and to what extent, they wish to accept orders under this Agreement. 

(7) Orders from List A will be placed within a period of two years from the 
date of the conclusion of this Agreement. By the end of the first year from the 
conclusion of this Agreement, the value of the orders shall not exceed 120 million 
Reichsmark. 

(8) Orders will be placed by the Trade Delegation, or, with joint liability of 
the Trade Delegation, by the importing organizations of the U.S.S.R. 

(9) The German Government undertake to give the Trade Delegation and the 
importing organizations of the U. S. S.R. the necessary assistance in placing orders, 
in each individual case where required, particularly in respect of delivery dates 
and the quality of the goods. 

(10) The delivery terms for orders placed under this Agreement shall be the 
normal ones and the prices for such supplies shall be reasonable. 

(11) Article VII of the German-Soviet Agreement on Trade and Payments, of 
December 19, 1938, shall also apply to orders placed under this Agreement. 

Article 2 

The German Government declare that the German Gold Discount Bank 
(“Dego”) has given them an undertaking to finance the additional orders to the 
amount of 200 million Reichsmark on the following terms: 

(1) The Trade Delegation of the U.S.S.R. in Germany shall deposit bills of 
exchange with “Dego.” These bills shall have an average term of seven years and 
shall be drawn for each individual transaction in such a way that 

30 percent of the amount of the order shall run for 6 1/2 years, 

40 percent of the amount of the order shall run for 7 years, 

30 percent of the amount of the order shall run for 7 1/2 years. 

The bills of exchange shall be drawn by the importing organizations of the 
U.S.S.R. and endorsed for acceptance by the Trade Delegation of the U.S.S.R. The 
bills shall be drawn in Reichsmark and shall be payable in Berlin. 

(2) On the basis of the bills of exchange, “Dego” shall make a credit available 
to the Trade Delegation and the importing organizations of the U.S.S.R., which 
shall be used to pay the German firms cash in Reichsmark. “Dego” will not 
require endorsement of this credit by the German suppliers. 

(3) The bills of exchange shall bear 5 percent interest per annum. This shall 
be paid by the Trade Delegation to “Dego” at the end of each quarter through the 
Trade Delegation’s current account with “Dego.” The interest shall be covered by 
bills of exchange if “Dego” so requires. 

(4) The Trade Delegation of the U.S.S.R. in Germany shall have the right to 
redeem before maturity the bills of exchange deposited with “Dego,” in accordance 
with paragraphs (1) and (3) of this article, in which case interest will be paid only 
for the period that has elapsed. 



German-Soviet Economic Treaties 229 


Article 3 

The agreement on the technical method of payment, in accordance with 
Article II of this agreement, will be concluded between “Dego” and the Trade 
Delegation of the U.S.S.R. 


Article 4 

Orders shall be placed in accordance with the provisions laid down in the 
General Delivery Conditions, the Arbitration Agreement, and the Final Protocol, 
signed on March 20, 1935, by the Russian Committee of German Industry, on the 
one side, and by the Trade Delegation, on the other side, with amendments which 
may be agreed on in an exchange of letters between the appropriate agencies of 
both sides. 


Article 5 

(1) The Government of the U.S.S.R. give an undertaking to take measures for 
the delivery to Germany of the goods set out in List C, to the minimum values 
indicated therein, within two years from the conclusion of this agreement. The 
prices of these goods shall be reasonable. 

(2) Delivery of, and payment for, the Soviet goods shall be made in 
accordance with the provisions of the German-Soviet Agreement on Trade and 
Payments, of December 19, 1938. 

(3) Should the Agreement of December 19,1938, not be extended during the 
term of this Agreement or, in the event of extension, be amended, it shall continue 
to apply unless otherwise agreed upon, until such time as all bills of exchange and 
interest on the credit have been paid up and the amounts paid in for Soviet 
deliveries of goods have been used for the redemption of all bills of exchange, 
including the previous ones. 

(4) This applies also to Articles VII and VIII of the above-mentioned 
Agreement of December 19, 1938. 

(5) The German Government undertakes to issue permits promptly for the 
import of Soviet goods into Germany, to an amount sufficient to cover at due date 
the credit provided for in this Agreement, and the payment of interest thereon, as 
well as to meet all other liabilities of U. S.S.R. bills of exchange in Germany. With 
this object in view, the two Governments shall, in due time, enter into negotiations 
for drawing up annual lists of such goods the import of which into Germany meets 
the requirements of German economy on the one hand and Soviet possibilities and 
interests on the other. 

(6) The German Government further undertakes to render assistance to the 
Trade Delegation of the U.S.S.R. in Germany and to the Soviet importing 
organizations in placing orders and obtaining supplies of other goods set out in 
List B, against the free amounts resulting from the sale of Soviet goods in 
Germany. 



230 Appendix B 


Article 6 

At least 60 percent of the German supplies shall be carried by German ships, 
if available, at rates which are usual and normal in view of the freight situation on 
the Germany-U.S.S.R. run. The remainder of the German supplies shall be carried 
by Soviet ships, using German seaports. 

Article 7 

(1) Should difficulties arise in placing and duly executing the orders provided 
for in this Agreement, or in the delivery of other goods—against the credit as well 
as against the current proceeds resulting from Soviet exports—the two 
Governments shall immediately enter into negotiations for the purpose of 
removing such difficulties. If no settlement is reached the further obligations of the 
Government of the Union of Soviet Socialist Republics under Article V of this 
Agreement, regarding the execution of measures for the delivery of Soviet goods 
to Germany, as set out in List C, shall be suspended until the ratio provided for in 
paragraph (3) of this Article is reached. 

(2) The same shall apply in the event of difficulties arising in the delivery of 
Soviet goods to the extent provided for in Article 5 of this Agreement: the two 
Governments shall immediately enter into negotiations for the purpose of 
removing such difficulties. If no settlement is reached the further obligations of the 
German Government under Article I of this Agreement, in connection with 
facilitating the placing and due execution of orders against the credit, shall be 
suspended until the ratio provided for in the following paragraph of this article is 
reached. 

(3) In the cases referred to in this article, the Government concerned shall not 
be released from their obligations to take all measures to reach, in the shortest 
time, a ratio between the orders in accordance with Lists A and B on the one hand 
and the contracts for the supply of Soviet goods, in accordance with List C, on the 
other hand, corresponding to the totals of these Lists. In this connection the two 
Governments shall take the necessary measures for the execution of the orders and 
contracts in accordance with the terms contained therein. 

Article 8 

This Agreement shall enter into force on the date of signature. 

Done in duplicate in the German and Russian languages, both texts being 
equally authentic. 

Berlin, August 19, 1939. 

For the German Government: For the Government of the U.S.S.R.: 


Dr. K. Schnurre 


E. Babarin 



German-Soviet Economic Treaties 231 


Confidential Protocol 

In connection with the Credit Agreement between the German Government 
and the Government of the Union of Soviet Socialist Republics, signed today, the 
undersigned have agreed as follows: 

The German Government will refund 1/2 percent per annum of the interest 
agreed upon and paid, so that an actual interest rate of 4 1/2 percent per annum 
on the credit will remain. This refund will be made at fixed repayment dates, to 
be agreed upon between “Dego” and the Trade Delegation, in such a manner that 
10 percent of the interest paid by the Trade Delegation for each accounting period 
will be refunded at the payment dates. Payment of such amounts shall be made in 
Reichsmark into one of the special accounts opened under the Agreement on 
Trade and Payments of December 19, 1938, of the Trade Delegation of the 
U.S.S.R. in Germany, or of the National Bank of the U.S.S.R. 

The amounts payable may be used in accordance with Article 4 of the said 
Agreement on Trade and Payments. 

It is understood that the right, specified in paragraph 17 of Article 4 of the 
above-mentioned agreement of December 19, 1938, of using the balances in the 
special accounts for payments of interest, extends also to the interest on the credit 
which is the subject of the Credit Agreement signed today between the German 
Government and the Government of the Union of Soviet Socialist Republics. 

Berlin, August 19,1939. 

For the German Government: For the Government of the U.S.S.R.: 

Dr. K. Schnurre E. Babarin 

Final Protocol On the German-Soviet Negotiations on Trade and Credit of 
August 19,1939 

I. After examination of their full powers, which were found to be in due form, 
the Contracting Parties signed the Credit Agreement between the German Reich 
and the Union of Soviet Socialist Republics and exchanged copies of this 
document. 

II. The documents set out below, being integral parts of the Credit Agreement 
above referred to, were signed and delivered: 

1. List A of German deliveries; 

2. List B of German deliveries; 

3. List C of Soviet deliveries; 

4. Confidential Protocol regarding refund. 

Berlin, August 19,1939. 

For the German Government: For the Government of the U.S.S.R.: 


Dr. K. Schnurre 


E. Babarin 



232 Appendix B 


Enclosure 1 

MY Dear Herr Schnurre: I acknowledge receipt of your letter of today, 
which reads as follows: 

“In connection with the Credit Agreement signed today, you expressed the 
desire that the German Government should lend their assistance so that the 
proposed U.S.S.R. orders in Germany may be successfully placed and executed. 

“To this I have the honor to declare that the German Government will, as 
heretofore in individual cases, give assistance to the Trade Delegation and the 
Soviet importing organizations in the placing and execution of orders. 

“The German Government will further see to it that representatives of the 
Trade Delegation of the U.S.S.R. and of the Soviet importing organizations may 
visit such firms as are prepared to undertake deliveries, in order to ascertain the 
quality of the articles to be ordered. The German Government will also see to it 
that representatives of the Trade Delegation of the U.S.S.R. and of the Soviet 
Importing Organizations are given the opportunity, after placing an order, of 
visiting, upon previous notice, the factories of the suppliers, for the purpose of 
ascertaining the position on, and progress of, the order, to undertake the requisite 
inspections in the case of special orders and to effect the expert passing of the 
goods.” 

The Trade Delegation of the U.S.S.R. in Berlin will in such cases immediately 
inform the Reich Ministry of Economics of the opening of negotiations on orders 
with firms, so that the Reich Ministry of Economics may exert its influence in the 
sense of this letter. 

I declare myself in accord with the contents of this letter. 

With the assurance of my highest consideration, 

E. Babarin 


Enclosure 2 

My Dear Herr Schnurre: I acknowledge the receipt of your letter of today, 
which reads as follows: 

“During the negotiations on the Credit Agreement, it was pointed out most 
emphatically on the German side that the prerequisite for the now newly regulated 
German-Soviet foreign trade is a good and smooth functioning of the arbitration 
procedure of March 20, 1935, agreed upon between the Russia Committee of 
German Industry and the Trade Delegation of the U.S.S.R. in Germany. On the 
Soviet side, readiness was expressed to ensure, jointly with the German side, the 
functioning of the arbitration procedure and to take up this question immediately 
upon the conclusion of the Credit Agreement. The German side took note of this. 

“Immediately the Credit Agreement has been concluded, both sides will do 
their best towards having this question settled between the Russia Committee of 
German Industry and the Trade Delegation of the U.S.S.R. in Germany.” 

I declare myself in accord with the contents of this letter. 

With the assurance of my highest consideration, 


E. Babarin 



German-Soviet Economic Treaties 233 


ECONOMIC AGREEMENT OF FEBRUARY 11, 1940 

In the exchange of letters of September 28, 1939, between the Reich Minister 
for Foreign Affairs and the Chairman of the Council of People’s Commissars and 
Commissar for Foreign Affairs of the Union of Soviet Socialist Republics, it was 
established that the Government of the German Reich and the Government of the 
Union of Soviet Socialist Republics, on the basis of and in the sense of the general 
political understanding achieved, desired by all possible means to develop the 
commercial relations and the exchange of commodities between Germany and the 
Union of Soviet Socialist Republics. For this purpose an economic program was 
to be drawn up by both sides, according to which the Union of Soviet Socialist 
Republics should make deliveries of raw materials to Germany, which should be 
compensated for by Germany with industrial deliveries over a more extended 
period of time. 

As a result of the negotiations for the establishment and execution of the 
contemplated economic program, the Government of the German Reich and the 
Government of the Union of Soviet Socialist Republics have made the following 
Agreement: 


Article 1 

In the period February 11, 1940, to February 11, 1941, in addition to the 
deliveries provided for in the Credit Agreement of August 19, 1939, the 
commodities enumerated in List 1 to the value of 420 to 430 million Reichsmarks 
shall be delivered from the Union of Soviet Socialist Republics to Germany. 

Article 2 

In the period February 11, 1941, to August 11,1941, there shall be delivered, 
likewise in addition to the deliveries provided for in the Credit Agreement of 
August 19, 1939, commodities to the value of 220 to 230 million Reichsmarks 
from the Union of Social Socialist Republics to Germany, namely, in each case, 
half of the values or amounts specified for the various commodities in List 1. 

Article 3 

The Government of the Union of Soviet Socialist Republics pledges itself to 
take all measures necessary to insure the performance of the deliveries named in 
Articles 1 and 2. The deliveries shall begin immediately. 

Article 4 

In payment for the Soviet deliveries provided for in Article 1, German 
products of the kind designated in List 2 (war material) and List 3 (industrial 
equipment and other industrial products) to the value of 420 to 430 million 
Reichsmarks shall be delivered from Germany to the Union of Soviet Socialist 
Republics during the period of February 11, 1940 to May 11, 1941. 



234 Appendix B 


Article 5 

In payment of the Soviet deliveries provided for in Article 2, German products 
of the kind designated in List 4 (war material) and List 5 (industrial equipment 
and other industrial products) to the value of220 to 230 million Reichsmarks shall 
he delivered from Germany to the Union of Soviet Socialist Republics during the 
period of May 11, 1941 to May 11, 1942. 

Article 6 

The Government of the German Reich pledges itself to take all steps necessary 
to insure the performance of the deliveries named in Articles 4 and 5. The German 
deliveries shall begin immediately. 


Article 7 

In List 6 appended to this Agreement are specified the machinery, equipment, 
and processes of production which the Union of Soviet Socialist Republics is 
interested in acquiring or receiving. Both parties shall take all steps that may be 
necessary in order that commercial contracts for machinery, equipment, and 
processes of production of the kind enumerated in the list may be concluded as 
soon as possible. 

The payments that become due on the basis of these contracts during the 
validity of this Agreement shall be made from special accounts of the Union of 
Soviet Socialist Republics in Germany by way of the German-Soviet clearing 
system. If they become due during the first fifteen months of the Treaty they shall 
be used in settlement of the Soviet deliveries provided for in Article 1, and insofar 
as they become due in the succeeding twelve months, in settlement of the Soviet 
deliveries provided for in Article 2. 

For this settlement other payments which are credited to the special accounts 
of the Union of Soviet Socialist Republics, for example for transit traffic, shall also 
be used. 


Article 8 

The Government of the Union of Soviet Socialist Republics has declared by 
the exchange of letters of September 28, 1939, that it is prepared to deliver, in 
addition to the quantities of petroleum otherwise agreed upon or still to be agreed 
upon, a supplementary quantity of petroleum equivalent to the annual production 
of the Drohobycz and Boryslaw oil region, in such proportions that half of this 
amount shall be delivered to Germany from the oil fields of the said oil region and 
the other half from the other oil regions of the Union of Soviet Socialist Republics. 
As compensation for these petroleum deliveries the Union of Soviet Socialist 
Republics shall receive deliveries of coal and steel tubing. 

It is agreed that the quantities of petroleum and petroleum products to be 
delivered in accordance herewith during the period September 28, 1939, to 
September 28, 1940, shall be included in the amount named in List 1. In 
calculating the value of the compensatory deliveries of coal and steel tubing, it 



German-Soviet Economic Treaties 235 


shall be assumed that this first annual amount is equal to the value of 30 million 
Reichsmarks. These petroleum deliveries shall be compensated by German 
deliveries of coal to the value of 20 million Reichsmarks and steel tubing to the 
value of 10 million Reichsmarks. These deliveries shall be made by September 28, 
1940. 


Article 9 

Both parties take it for granted that the mutual deliveries based on this 
Agreement are to balance. 

The Soviet deliveries made during the first twelve months of the duration of 
this Agreement shall be compensated by German deliveries by May 11,1941; that 
is, after the first six months 50 percent of the Soviet deliveries provided for in the 
first period of the treaty shall be balanced by 40 percent of the German deliveries 
provided for in the same period of time; after twelve months 100 percent of the 
Soviet deliveries shall be balanced by 80 percent of the German deliveries. The 
rest of the German deliveries shall be made within the following three months. 

The Soviet deliveries made during the period from the thirteenth to the end 
of the eighteenth month of the duration of this Agreement shall be compensated 
by German deliveries to be made during the period from the sixteenth to the end 
of the twenty-seventh month, computed from the date this Agreement goes into 
effect, in equal quarterly amounts. It is provided that during this second period of 
the Agreement a balance sheet of the mutual deliveries shall be drawn up every 
three months. 


Article 10 

Each of the two Governments shall appoint plenipotentiaries who shall meet 
on the date specified in the previous Article. The task of these plenipotentiaries 
shall be to study currently the total commercial intercourse between Germany and 
the Union of Soviet Socialist Republics and the observance of the percentage 
relationship between the German and Soviet deliveries mentioned in Article 9, and 
to take all measures necessary to carry out the economic program agreed upon 
between the Governments, especially to balance the above-mentioned percentage 
relationship. 

The Plenipotentiaries of both Governments shall be empowered within the 
scope of their duties to communicate with each other directly, either in writing or 
orally. They may from time to time draw the experts needed in their work into 
their consultations. 

If the percentage relationship fixed by Article 9 for the mutual deliveries is 
disturbed in one of the periods of time, both parties shall take measures in the 
shortest possible time for the removal of the disproportion, in which connecting 
supplementary deliveries, especially of coal, shall be used by Germany as a means 
of settlement. In case this cannot be arranged, the interested party shall have the 
right to discontinue temporarily its deliveries until the stipulated relationship is 
attained. 



236 Appendix B 


Article 11 

In the execution of this Agreement the following shall be applied: 

(a) the Agreement regarding exchange of goods and payments of December 
31, 1939; 

(b) the provisions of Article IV and of section 3 of Article V of the Credit 
Agreement of August 19,1939. Besides, in connection with the payment of Soviet 
obligations arising from orders made on the basis of this Agreement, the 
provisions of section 5 of Article V of the above-mentioned Credit Agreement 
shall be correspondingly applicable; 

(c) the Confidential Protocol of August 26, 1939. 

Article 12 

Both Parties have agreed that the accommodations granted for transit traffic 
on the basis of the exchange of letters of September 28, 1939 (freight reductions 
of 50 percent on soybeans and the payment of all railway freight charges in the 
transit traffic through the German-Soviet clearing system) shall remain in force 
during the entire period of validity of this Agreement. In order to facilitate use of 
the sums paid in Reichsmarks by Germany for freight charges, Germany shall lend 
her cooperation to the Soviets in placing orders in Germany and in acquiring 
goods and techniques of production there. 

Article 13 

The Agreement shall not affect the Credit Agreement between the German 
Reich and the Union of Soviet Socialist Republics of August 19,1939, which shall 
remain completely in force. 


Article 14 

This Agreement shall become effective upon signature. 

Done in two original copies in the German and the Russian languages 
respectively, both texts being equally authentic. 

Done in Moscow, February 11, 1940. 

For the Government of the German Reich: Representing the Government of the 

U.S.S.R.: 

K. Ritter A. Mikoyan 

K. SCHNURRE BABARIN 

Confidential Protocol 

In connection with the Economic Agreement signed today between the 
German Reich and the Union of Soviet Socialist Republics, the undersigned 
Plenipotentiaries of the Governments of both Parties have agreed concerning the 
following: 

The Government of the Union of Soviet Socialist Republics shall instruct the 



German-Soviet Economic Treaties 237 


proper Soviet commercial organizations to enter into negotiations with the 
German organizations and firms designated by the Government of the German 
Reich in regard to the purchase by the Soviet Union of metals and other goods in 
third countries and in regard to the sale of these metals and goods to Germany. 
Such sales shall be made by the Soviet organizations on the following basis: 

Payment for the goods by the German purchasers up to 70 percent in 
transferable foreign currency to be designated by the Soviet commercial 
organization making the delivery and 30 percent in Reichsmarks in accordance 
with the German-Soviet Agreement regarding exchange of goods and payments 
of December 31, 1939. If the German purchaser is not in a position to make 
payment in the currency suggested by the Soviet commercial organization, he may 
offer to make payment in another transferable currency. If the Soviet commercial 
organization refuses this currency, payment shall be made in gold on conditions 
to be agreed upon between the purchaser and the Soviet commercial organization 
making delivery. 

In this connection the Germans shall, for the purpose of utilization of the 
sums in Reichsmarks paid by the Germans to the Soviet commercial organizations, 
lend their cooperation in placing orders in Germany and in acquisition of goods 
and production techniques in Germany. 

Moscow, February 11, 1940. 

For the Government of the German Reich: Representing the Government of the 

U.S.S.R.: 


K. Ritter 
K. Schnurre 


A. Mikoyan 
Babarin 



238 Appendix B 


AGREEMENT OF JANUARY 10, 1941 

As the result of negotiations concerning reciprocal deliveries on the basis of 
the Economic Agreement of February 11, 1940, in the second treaty period the 
German Government and the Government of the Union of Soviet Socialist 
Republics have reached agreement on the following: 

Article 1 

In the period February 11, 1941, to August 1, 1942, commodities specified in 
List 1A to the value of 620 to 640 million Reichsmarks will be delivered from the 
Union of Soviet Socialist Republics to Germany. The obligations for deliveries 
stipulated in articles 2 to 8 of the Economic Agreement are hereby superseded. 

Article 2 

In compensation for the Soviet deliveries in article 1, German commodities 
as stipulated in List IB to the value of 620 to 640 million Reichsmarks will be 
delivered from Germany to the U.S.S.R. 

It is agreed that the Soviet Government can furthermore during the period of 
validity of this agreement tender orders with times of delivery going beyond 
August 1, 1942. 

The obligations for deliveries stipulated in articles 5 and 8 of the Economic 
Agreement are hereby superseded. 


Article 3 

The apportionment of the German and Soviet deliveries in the particular 
periods will be done on the basis of equality between the German and Soviet 
deliveries in each quarter of a year. 

As an exception to paragraph lof this article, that part of the deliveries 
specified in articles land 2 which had been stipulated in the Economic Agreement 
of February 11, 1940—i.e., German and Soviet deliveries each to the value of 225 
million Reichsmarks—is to be carried out in accordance with the schedule laid 
down in the aforesaid agreement. 


Article 4 

In conformity with article 3, the German and Soviet deliveries stipulated in 
articles 1 and 2 of this agreement are to be completed in quarterly installments 
according to the following schedule: 



Soviet 

German 

Quarterly installment 

deliveries 

deliveries 

From Feb. 11 to May 11, 1941 

115 


From May 11 to Aug. 11, 1941 

170 

117 

From Aug. 11, to Nov. 1, 1941 

87 

143 



German-Soviet Economic Treaties 239 


From Nov. 1, 1941 to Feb. 1, 1942 

86 

142 

From Feb. 1 to May 1, 1942 

86 

142 

From May 1 to Aug. 1, 1942 

86 

86 


The period from August 11, 1941, to November 1, 1941, is reckoned as 
quarterly installment. 


Article 5 

If the ratio of quarterly German and Soviet deliveries stipulated in article 4 
of this agreement is not attained, both parties will take measures to eliminate this 
faulty ratio at the earliest possible date. The Plenipotentiaries of both Governments 
named in article 10 of the Economic Agreement will meet at the latest within 
fifteen days after the end of the corresponding quarterly period. 

Article 6 

Otherwise, the terms of the Economic Agreement of February 11, 1940, as 
well as the Confidential Protocol and the exchange of letters which go along with 
it, remain in force in their full extent until August 1, 1942, so far as they are not 
changed by the above terms. 

The terms of the Economic Agreement of February 11, 1940, and of this 
agreement are also to be applied to orders and deliveries on the basis of this 
agreement whose fulfillment will possibly not have been completed by August 1, 
1942. 


Article 7 

This agreement shall become effective upon signature. Done in two original 
copies in the German and Russian languages respectively, both texts being equally 
authentic. 

Executed in Moscow, January 10, 1941. 

For the Government of the German Reich: With Full Power of the Government 

of the U.S.S.R.: 


K. SCHNURRE A. I. MlKOYAN 

German-Soviet Russian Secret Protocol 

The German Ambassador, Count von der Schulenburg, Plenipotentiary of the 
Government of the German Reich, on the one hand, and the Chairman of the 
Council of the People’s Commissars of the USSR, V.M. Molotov, Plenipotentiary 
of the Government of the USSR, on the other hand, have agreed upon the 
following: 

(1) The Government of the German Reich renounces its claim to the strip of 
Lithuanian territory which is mentioned in the Secret Additional Protocol of 



240 Appendix B 


September 28, 1939, and which has been marked on the map attached to this 
Protocol; 

(2) The Government of the Union of Soviet Socialist Republics is prepared to 
compensate the Government of the German Reich for the territory mentioned in 
Point 1 of this Protocol by paying 7,500,000 gold dollars or 31,500,000 
Reichsmarks to Germany. 

The amount of 31.5 million Reichsmarks will be paid by the Government of 
the USSR in the following manner: one-eighth, that is 3,937,500 Reichsmarks, in 
nonferrous metal deliveries within three months after the signing of this Protocol, 
the remaining seven-eighths, or 27,562,500 Reichsmarks, in gold by deduction 
from the German gold payments which Germany is to make by February' 11,1941, 
in accordance with the correspondence exchanged between the Chairman of the 
German Economic Delegation, Dr. Schnurre, and the People’s Commissar for 
Foreign Trade of the USSR, M. A.I. Mikoyan, in connection with the “Agreement 
of January 10,1941, concerning reciprocal deliveries in the second treaty period 
on the basis of the Economic Agreement between the German Reich and the 
Union of Soviet Socialist Republics of February 11, 1940.” 

(3) This Protocol has been executed in two originals in the German language 
and two originals in the Russian language and shall become effective immediately 
upon signature. 

Moscow, January 10, 1941. 

For the Government of the German Reich: With the Full Power of the 

Government of the U.S.S.R.: 


SCHULENBURG (Seal) 


V. Molotov (Seal) 



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Index 


Afghanistan, 71, 161 
Aircraft: German shipments to the 
USSR of, 92, 114, 147, 172; 
Soviet demands from Germany 
for, 86, 99, 112, 145, 147, 

172. See also Germany, and 
the USSR, military 
Aluminum, 147-49 
Asbestos, 115 

Astakhov, Georgi, Head of Soviet 
Trade Delegation, 1938-39, 

29, 45-47, 54-56, 65, 68 
Austria, 28 

Babarin, Evgeny, Head of Soviet 
Trade Delegation, 1939-41, 

49, 54-55, 57, 65, 68, 111-12 
Backe, Herbert, German State 
Secretary for Agriculture, 160 
Baku, 42. See also Caucasus 
Baltic States: and Germany, 77, 
134, 144, 149-50; and the 
USSR, 80, 124-26, 129, 134, 
144, 150, 161. See also 
Estonia; Latvia; Lithuania; 


Lithuanian Strip; 

Volksdeutsche 

Barbarossa. See Germany, plans to 
attack the USSR 
Batum, 136. See also Oil, Soviet 
shipments to Germany of 
Basis Nord, 78, 90-91. See also 
Germany, and the USSR, 
naval 

Baumbach, Norbert von, German 
Naval Attache in Moscow, 124 
Beck, Josef, Polish Foreign 
Minister, 1932-39, 30, 42 
Belgium, 172-73 
Berezhkov, Valentin, Stalin’s 
Translator, 17 
Berlin Treaty. See Treaties, 
political, Germany and the 
USSR 

Bessarabia, 126, 129, 134-35, 137, 
144, 148. See also Rumania, 
and the USSR 

Bismarck, German plans for 
construction of, 92, 101, 104, 
125. See also Naval equipment 



256 Index 


Blockade breakers, 146, 151, 174 
Bohemia, 102 

Brauchitsch, Walther von, Army 
Commander-in-Chief, 

1938-41, 128 

Brautigam, Otto, Official in the 
Economic Policy Office of the 
Foreign Ministry, 18 
Bristles, 117 

Bukovina, 126, 135. See also 
Rumania, and the USSR 
Bulgaria, 146, 161 
Buna rubber, 125, 146, 174. See 
also Synthetic materials, 
German production of rubber 

Caucasus, 42, 70, 103, 163, 174, 
179. See also Baku; Grozny; 
Maikop 

Chamberlain, Neville, British 
Prime Minister, 42 
China, 2, 124 

Chrome, 2, 68, 100, 181. See also 
Nonferrous metals 
Churchill, Winston, British Prime 
Minister, 1940-45, 114, 124 
Clodius, Carl, AA Deputy Chief of 
Economic Policy Department, 
124-25, 161 

Coal: German shipments to the 
USSR of, 102, 113, 117, 182; 
Soviet demands from Germany 
for, 71, 103-4, 117, 148 
Cobalt, 148-49 
Commercial arrangments, 

Germany and the USSR: air 
traffic, 99, 102; arbitration, 

14, 19, 67, 91; clearing 
accounts, 16, 24, 28, 31, 57, 

88, 99, 129, 173, 182; credits, 
see Treaties, economic, 
Germany and the USSR; 
railroads, 71, 80, 87-89, 99, 
102, 137-38. See also 


Germany, and the USSR, 
transportation; shipping, 54, 

70, 99, 136; tariffs, 14, 102, 
147, 161-62; telegraphs and 
telephones, 126; transit trade, 

71, 87-88, 104, 137, 147, 152, 
162, 172. See also Trans- 
Siberian Railway 

Constanza, 136, 173. See also Oil, 
Soviet shipments to Germany 
of 

Copper, 126, 152, 170 
Cotton, 91, 116-17, 129, 161, 170 
Coulondre, Robert, French 

Ambassador to the USSR, 30 
Cripps, Sir Stafford, British Envoy, 
117 

Czechoslovakia, 28-30, 36, 43, 45, 
163 

Czernowitz rail line, 78, 80, 

87-89, 91. See also Germany, 
and the USSR, transportation, 
via Rumania 

Danube Commission, 150. See also 
Commercial arrangements, 
Germany and the USSR, 
shipping 

Dassler, Head of German Grain 
Negotiations with the USSR, 
81,115 

Davydov, Soviet Trade Official, 31 
Dekanosov, Vladimir, Soviet 
Ambassador to Germany, 
1940-41, 146 
Denmark, 114, 116 
Doerr, Lieutenant Colonel, 87 
Drohobycz-Boiyslav, 71, 104. See 
also Oil, Soviet shipments to 
Germany of 

Estonia, 125, 136. See also Baltic 
States 

Exportkleb, 115. See also Grain, 



Index 257 


Soviet shipments to Germany 
of 

Far East: German demands from 
the USSR for transit of goods 
from, 67, 70-71, 78, 101; 
Soviet shipments to Germany 
of goods from, 2-3, 89, 102, 
113, 150, 161, 173 
Fats and Oils, 2-3, 65, 144, 163, 
171, 174. See also Soybeans 
Finland: and Germany, 91, 135, 
145, 170, 181; and the USSR, 
90, 103, 111, 124, 146, 170 
Five-Year Plan, 15-16, 31, 35, 43, 
66. See also USSR, 
mobilization for war 
Flax, 124 

Four-Year Plan, 1, 17, 25, 28, 34, 
43-44. See also Germany, 
mobilization for war 
France, 24, 30, 103, 116-17, 
124-25, 127 

Friedrichson, Deputy Head of 
Soviet Trade Delegation, 
1933-38, 18, 25 

Funk, Walther, Reich Minister of 
Economics, 1938-45, 28, 30, 
65 

Germany: foreign policy, general, 
12-13, 29-30, 32, 34, 42, 
127-28; mobilization for war, 
general, 4-7, mobilization for 
war, 1933-38, 15-16, 18, 
28-29; mobilization for war, 

1939, 42, 44, 53-54, 56-58, 
63-67; mobilization for war, 

1940, 101, 116, 127-28, 136, 
138; mobilization for war, 
1941-44, 146, 159-60, 
173-74, 182; plans to attack 
the USSR, economic, 135, 
138, 146, 151, 160, 162-63; 


plans to attack the USSR, 
general, 4, 6-7, 127, 136, 143, 
150, 170-71, 180-81; plans to 
attack the USSR, military, 

128, 134-35, 138, 146; press, 
15, 34, 44, 55, 68, 170; and 
the Russo-Finnish War, 
90-91,99, 101, 110-11, 128, 
181; and Afghanistan, 161; 
and Austria, 28; and the Baltic 
States, 77, 134, 144, 149-50; 
and Belgium, 173; and 
Bulgaria, 146, 161; and 
China, 2, 124; and 
Czechoslovakia, 28-29, 42; 
and Denmark, 114; and 
Estonia, 136; and Finland, 91, 

135, 145, 170, 181; and 
France, 117, 127; and Great 
Britain, 2, 11, 29, 63, 124, 
126-27, 134, 136, 160, 180; 
and Greece, 164; and Holland, 
3, 64, 127; and Hungary, 64, 
146; and Italy, 44, 53, 124, 

136, 151, 159, 174; and Japan, 
44, 46, 53, 127, 136, 150, 163; 
and Manchuria, 3, 136; and 
Norway, 114; and Poland, 30, 
42, 46, 53, 63, 67, 70, 135; 
and Rumania, 2, 12, 42, 64, 

89, 124, 135, 161; and South 
Africa, 2; and Turkey, 2; and 
the USSR, economic, see 
Treaties, economic, Germany 
and the USSR; and the USSR, 
military, 163, 172; and the 
USSR, naval, 78, 90-91, 115, 
172; and the USSR, political, 
see Treaties, political, 
Germany and the USSR; and 
the USSR, transportation, 
general, 3, 66, 70, 78, 102, 
110, 125-26, 129, 136, 144, 
171; and the USSR, 



258 Index 


transportation, via Poland, 81, 
89, 91, 148; and the USSR, 
transportation, via Rumania, 
70, 87, 89, 91, 134, 148, 160, 
see also Czemowitz Line; and 
the USSR, transportation, via 
Siberia, 3, 70, 78, see also 
Trans-Siberian Railroad; and 
the Ukraine, 12, 30, 174; and 
the United States, 65, 127, 

136, 159; and Yugoslavia, 164 
Gold, 144, 149, 152, 160 
Goring, Herbert, German 
Economic Official, 25-27 
Goring, Hermann, Head of Four- 
Year Plan and Reich Air 
Minister: and the Battle of 
Britain, 127; and German- 
Soviet economic relations, 
aircraft, 112, 114, 145, 162; 
and German-Soviet economic 
relations, general, 25-26, 68, 
88, 92, 100, 135, 138, 144; 
and German-Soviet political 
relations, 34, 43, 112; and the 
German war economy, 24-25, 

28, 125, 138, 162 
Graf Zeppelin, German 

construction of, 115 
Grain: German demands from the 
USSR for, 80-81, 89, 102, 

105, 115, 134, 144, 147-48, 
152, 161-62; German supplies 
of, 2-3, 101, 116, 174, 182; 
Soviet shipments to Germany 
of, 12, 112-14, 116, 126, 171, 
174; Soviet supplies of, 12, 66, 
147, 170 

Great Britain: and German-Soviet 
relations, 44, 48, 53, 80, 103, 
171, 173; and Germany, 2, 11, 

29, 63, 124, 126-27, 134, 136, 
160, 180; and Poland, 42, 63; 
and Rumania, 12; and the 


USSR, 44, 46, 48, 53, 66, 80, 
116-17, 175, 179 

Greece, 164 

Grozny, 174. See also Caucasus 

Guderian, Heinz, German general, 
88 

Gutehojfnungshiitte AG, 69, 88. 

See also Synthetic materials 
facilities 

Haider, Franz, German Army 
Chief of Staff, 1938^12, 77, 
127-28, 138 

Haudan, Dr. Erwin, Professor at 
the National Defense Institute, 
University of Berlin, 70 

Heintze, Official in the Ministry of 
Economics, 18 

Herwarth, Hans “Johnnie” von, 
German Second Secretary in 
Moscow, 33, 35, 46, 48, 66, 80 

Hess, Rudolf, German Deputy 
Fiihrer, 171 

Hilger, Gustav, German Counselor 
of Embassy in Moscow: 
personal, 34; and German- 
Soviet economic relations, 
general, 17, 28; and the 
August 19, 1939, economic 
treaty, 45-48, 56; and the 
February 11, 1940, economic 
treaty, 105; and the January 
10, 1941, economic treaty, 

144, 162-63 

Holland, 64, 127. See also Low 
Countries 

Homs, 117 

Hungary, 64, 146 

I.G. Farben, 67-68, 77, 102, 111. 
See also Synthetic materials 
facilities 

Institute for World Economics 
(Kiel), 65, 68. See also 



Index 259 


Germany, mobilization for war 
Intestines, 117 

Iran, transit of goods to Germany 
from, 71, 87, 114 
Iridium, 111, 117, 163 
Iron ore, 89, 92, 100-101 
Italy: and Germany, 44, 53, 124, 
136, 151, 159, 174; and the 
USSR, 35, 80, 90, 135 

Japan: and Germany, 44, 46, 53, 
127, 136, 150, 163; and the 
USSR, 113, 162, 170, 172 
Jodi, Alfred, Chief of OK tv's 
Operations Staff, 69, 128, 160 

Kandelaki, David, Head of Soviet 
Trade Delegation, 1934-38, 

18, 23, 25-26, 28 
Keitel, Wilhelm, Chief of OKW, 
1938-45, 87, 92, 101, 160 
Khrushchev, Nikita, Soviet 
Viceroy of the Ukraine, 62 
King, John Herbert, Soviet spy in 
London, 43. See also USSR, 
intelligence network 
Kirk, Alexander, American Charge 
in Moscow, 33, 46, 98 
Kostring, Ernst, German Military 
Attache in Moscow, 32, 

44-45, 47, 56, 123, 144, 147, 

169 

Krebs, Colonel, Acting German 
Military Attache in Moscow, 

170 

Krupp, 124, 129. See also Military 
equipment, German shipments 
to USSR of 

Krutikov, Deputy Commissar for 
Foreign Trade, 79, 112, 163, 
170, 172 

Kuznetsov, Soviet Admiral, 86 
Latvia, 125. See also Baltic States 


Lend-Lease, 182-83 
Lithuania, 125. See also Baltic 
States; Lithuanian Strip 
Lithuanian Strip, 126, 133-35, 
148-49, 151-52 

Litvinov, Maxim, Soviet Foreign 
Commissar, 1930-39, 30 
Low Countries, 127. See also 
Belgium; Holland 
Lumber. See Wood 
Lutzow, 92, 100-101, 104, 113, 
115, 117, 137, 172, 182. See 
also Naval equipment 

Machine tools: German shipments 
to the USSR of, 182; German 
supplies of, 65; Soviet 
demands from Germany for, 
69, 92, 100-01, 105, 124, 
147-49; Soviet supplies of, 3, 
179 

Maikop, 174. See also Caucasus 
Manchuria, 67, 80, 87, 91, 100, 
104, 136, 144. See also Far 
East 

Manganese: German demands 
from the USSR for, 26, 114, 
124-25, 148, 152; German 
supplies of, 2, 16, 43, 54, 116, 
127, 174; Soviet shipments to 
Germany of, 116, 172, 174; 
Soviet supplies of, 56, 58, 66, 
68. See also Nonferrous 
metals 

Mannesmann, 67. See also 
Military equipment 
Memel, 42, 134. See also Baltic 
States, and Germany 
Merekalov, Alexei, Soviet 
Ambassador to Germany, 
1938-39, 29, 34, 43, 65 
Mikoyan, Anastas, Soviet Trade 
Commissar: personal, 27, 35; 
and the August 19, 1939, 



260 Index 


treaty, 35-36, 46-49; and the 
September 28, 1939, economic 
agreement, 67; and the 
February 11, 1940, economic 
treaty, 79-82, 86, 92, 98, 
103-4, 113, 115; and the 
January 10, 1941, economic 
treaty, 135, 144-45, 148 

Military equipment: German 
shipments to the USSR of, 92, 
101, 105, 114, 145, 147-48, 
172, 182; Soviet demands 
from Germany for, 86, 90, 
98-101, 111-12, 145, 150. See 
also Aircraft; Naval 
equipment 

Mineralol-Einfuhr GmbH, 89. See 
also Oil, German demands 
from the USSR for 

Mines, 3, 92, 115. See also Naval 
Equipment 

Molotov, Vyacheslav, Soviet 

Foreign Commissar, 1939-49: 
personal, 44, 114; and Soviet- 
German economic relations, 
general, 24; and Soviet- 
German political relations, 
44-46, 48, 55, 57, 62, 65, 68, 
138, 143, 145-46; and the 
August 19, 1939, economic 
treaty, 45-46, 56, 61; and the 
September 28, 1939, economic 
agreement, 71; and the 
February 11, 1940, economic 
treaty, 79, 87-88, 92, 98-100, 
113-15, 117, 126, 129; and 
the January 10, 1941, 
economic treaty, 134, 144-49, 
152 

Molybdenum, 2, 170, See also 
Nonferrous metals 

Munich crisis, 29-30, 42, 55. See 
also Germany, and 
Czechoslovakia 


Murmansk, 68, 70, 104, 115. See 
also Germany, and the USSR, 
naval 

Mussoloni, Benito, Italian Prime 
Minister, 111, 138 

Nadolny, Rudolf, German 
Ambassador to the USSR, 
1933-34, 16-17 
Naval equipment: German 

shipments to the USSR of, 92, 
113, 115, 117, 182; Soviet 
demands from Germany for, 
70, 80, 86, 90, 100-1, 115. 

See also Military equipment 
Nazi-Soviet Pact. See Treaties, 
political, Germany and the 
USSR 

Near East, transit of goods to 
Germany from, 67, 71 
Neumann, German State Secretary, 
68 

Nickel, 2, 16, 116, 124, 147, 152, 
161, 170. See also Nonferrous 
metals 

Nonferrous metals, 65, 100, 102, 
151-52, 160. See also 
Chrome, Manganese, 
Molybdenum, Nickel, and 
Wolfram 
Norway, 114, 116 

Office of Economic Development, 
54. See also Germany, 
mobilization for war 
Office of War Economic Planning, 
44, 53. See also Germany, 
mobilization for war 
Oil: German demands from the 
USSR for, 70-71,78, 80, 89, 
105, 111, 116, 148, 161, 170; 
German supplies of, 2, 12, 16, 
35, 42, 54, 64, 77, 89, 101. 
116, 124, 127, 151, 159, 



Index 261 


173-74; Soviet shipments to 
Germany of, 24, 91, 102, 110, 
113-14, 126, 134-37, 171-72; 
Soviet supplies of, 56, 58, 
65-66, 68, 163 
Oil-seeds. See Fats and Oils 
Otto Wolff, 68-69, 88, 110, 111. 
See also Synthetic materials 
facilities 

Petropavlovsk. See Ltitzow 
Petsamo, 124, 144, 147, 149-50, 
161. See also Finland; Nickel 
Phosphates, 127, 181 
Platinum, 65, 78, 87, 89, 102, 111, 
114, 117, 148, 163, 181 
Poland: and German-Soviet 
relations, 30, 34, 69, 87, 89, 
103, 110, 148, 171; and 
Germany, 30, 42, 46, 53, 63, 
67, 70, 135; and the USSR, 

57, 66, 68 

Potemkin, Soviet Vice Commissar 
for Foreign Affairs, 30 
Prinz Eugen, 92. See also Naval 
equipment 

Przemysl, 99, 102. See also 
Germany, and the USSR, 
transportation, via Rumania 

Raeder, Erich, Chief of the High 
Command of the German 
Navy, 70, 87, 90, 100-101, 
127, 138 
Rags, 117 

Rapallo Treaty. See Treaties, 
political, Germany and the 
USSR 

Reich Defense Council, 68, 80 
Reyss, Russia Committee 

President, 29. See also Russia 
Committee of German 
Industry 

Ribbentrop, Joachim von, Reich 


Foreign Minister, 1938-45: 
personal, 1, 55; and German- 
Soviet economic relations, 
general, 30; and German- 
Soviet political relations, 32, 
34, 56-57, 62,71, 135-36, 

138, 145; and the August 19, 
1939, economic treaty, 54-55; 
and the September 28, 1939, 
economic treaty, 1, 69, 71, 79; 
and the February 11, 1940, 
economic treaty, 81,91, 

98-99, 103-5, 115; and the 
January 10, 1941, economic 
treaty, 134, 148, 150-52, 160 
Ritter, Karl, German Ambassador 
on Special Assignment: and 
German-Soviet economic 
relations, general, 26-27, 32; 
and the February 11, 1940, 
economic treaty, 79-81, 

87-90, 92, 98-102, 104, 109, 
112-13, 116-17, 124-25; and 
the January 10, 1941, 
economic treaty, 133, 149, 160 
Rosengolz, Soviet Trade 
Commissar, 27 
Rubber: German transit trade 
demands from the USSR for, 
78, 80, 126; German supplies 
of, 16,35, 54, 64, 77, 116, 

124, 127, 146, 151, 159-60, 
174; Soviet transit trade 
shipments to Germany of, 150, 
161-62, 171-73; Soviet transit 
trade supplies of, 2, 58, 65 
Ruhr-Chemie, 68 
Rumania: and German-Soviet 
relations, 70-71, 78, 89, 135, 
148, 171, 173, 181; and 
Germany, 2, 12, 42, 64, 89, 
124, 135, 161; and the USSR, 
124-26, 146, 170. See also 
Bessarabia; Bukovina 



262 Index 


Russia Committee of German 
Industry: and German-Soviet 
economic relations, general, 

19, 27, 29, 32; and the August 
19, 1939, economic treaty, 

66- 67; and the September 28, 

1939, economic agreement, 
69-70, 77-78; and the 
February 11, 1940, economic 
treaty, 87, 110, 126; and the 
January 10, 1941, economic 
treaty, 135, 151, 172 

Savtschenko, member of Soviet 
trade delegation to Germany, 
90 

Schacht, Hjalmar, Reichsbank 
President, 1933-39, 16, 18, 
23-24, 27-28 

Scheliha, Rudolf von, Soviet spy in 
Warsaw, 47. See also USSR, 
intelligence network 
Schmid, Walter, AA Official, 54 
Schnurre, Karl, AA Head of East 
European Economic Section: 
personal, 1, 25, 31-32; and 
German-Soviet economic 
relations, general, 25-26, 28, 

30- 31, 173; and the August 
19, 1939, economic treaty, 

31- 35,41,45,47-49, 54-58; 
and the September 28, 1939, 
economic agreement, 1, 65, 

67- 71; and the February 11, 

1940, economic treaty, 78-79, 
81-82, 87, 91-92, 98, 

100-105, 112, 115, 125-26, 
129; and the January 10, 1941, 
economic treaty, 133-38, 
143-44, 147-52, 159-60, 162, 
164, 169-72 

Schulenburg, Friedrich von, 
German Ambassador to the 
USSR: personal, 30, 151; and 


German-Soviet economic 
relations, general, 25, 30-31, 
34, 173; and German-Soviet 
political relations, 29, 32, 
34-36, 46, 48, 55-57, 62, 65, 
113-14, 144; and the August 
19, 1939, economic treaty, 44, 
46-47, 49; and the February 
11, 1940, economic treaty, 88, 
98-101, 113-15, 129; and the 
January 10, 1941, economic 
treaty, 147-48, 151-52, 
169-70 

Schwerin-Krosigk, Reich Finance 
Minister, 170 

Seydlitz , 92. See also Naval 
equipment 
Shale-oil, 136, 172 
Skins, 70 

Skoda Works, 43, 45, 164. See 
also Germany, and 
Czechoslovakia 

Skossyrev, Head of Soviet Trade 
Delegation, 29-30 
Skvartsev, Alexander, Soviet 
Ambassador to Germany, 
1939-40, 91, 112, 134 
Smolensky, Head of Soviet Trade 
Delegation, 28-29 
Sodenstem, German general, 127 
Sorge, Richard, Soviet spy in 
Tokyo, 43. See also USSR, 
intelligence network 
Soviet Union. See USSR 
Soybeans, 3, 67, 80, 87, 91, 100, 
102, 104, 181. See also Fats 
and Oils 

Speer, Albert, Reich Minister for 
War Production, 1942-45, 62, 
173 

Steel, 110, 125 
Stresemann, Gustav, German 
Foreign Minister, 14 
Submarines, 70, 90. See also Naval 



Index 263 


equipment 
Sulphur, 124, 172 
Suritz, Soviet Ambassador to 
Germany, 27 

Synthetic materials: German oil 
production from, 1, 64, 

173-74, 182; German rubber 
production from, 2, 64, 124, 
135, 146, 173-74, 182 
Synthetic materials facilities, 
German shipments to USSR 
of, 3, 86-87, 100, 114-15; 
Soviet demands from Germany 
for, 69-70, 81, 88, 90, 102, 
105, 111, 125, 137-38 

TASS, Soviet news agency, 173 
Tea, 110, 114 
Teriberka. See Basis Nord 
Ter-Nedden, W., Head of RWAfs 
German-Soviet Trade Section, 
32-33,78, 89, 110, 125, 133, 
135 

Tevossyan, Ivan, Head of Soviet 
Commercial Missions, 79, 81, 
88-90, 111-14 
Textiles, 181 

Thomas, Georg, Chief of WiRilAmt 
in OKW: and German plans to 
attack the USSR, 160, 162-63; 
and German-Soviet economic 
relations, general, 65, 68, 70, 
78, 80, 101, 135, 138; and the 
German war economy, 77, 80, 
127, 138 
Tin, 78 

Tippelskirch, Werner, German 
Counselor of Embassy in 
Moscow, 30, 49 

Togo, Japanese Ambassador to the 
USSR, 36 

Trans-Siberian Railway, 3, 88, 

109, 135, 146, 151, 160, 162, 
171-72, 179. See also Far 


East; Germany, and the USSR, 
transportation, via Siberia 
Treaties, economic, Germany and 
the USSR: pre-Hitler, 14-15; 
April 9, 1935, 15-19; April 
29, 1936, 23-24; December 
24, 1936, 26; March 1, 1938; 
27-28; December 19, 1938, 
30-33; August 19, 1939, 1, 

54, 57,61-63,67, 103-5, 113, 
126, 129, 134, 143, 161, 180; 
September 28, 1939, 71, 
77-79, 97-98, 100, 102, 105; 
February 11, 1940, 97, 104-5, 
109, 125-26, 129, 134-35, 

143, 161, 170, 180; January 
10, 1941, 143, 149-52, 

160-61, 164, 172, 181, See 
also Commercial 
arrangements 

Treaties, political, Germany and 
the USSR, Rapallo Treaty, 13; 
Berlin Treaty, 14-15; Nazi- 
Soviet Pact, 58, 62-63, 69, 90; 
Boundary and Friendship 
Treaty, 71, 79, 128 
Tripartite Pact, 136, 146, 150, 161 
Tschunke, Fritz, Editor of Die 
Ostwirtschaft and Russia 
Committee Business Manager, 
27, 32, 43, 80, 109 
Tubing, steel, 71, 104, 111 
Turkey, 2 

Turrets, 3, 92, 100-101, 104-5, 

144, 147, 180. See also 
Military equipment 

Udet, Ernst, German Air Force 
Liaison Officer, 86, 112 
Ukraine, 12, 30, 174 
Ultra, 173 

USSR: foreign policy, general, pre- 
1939, 15, 27, 30, 32, 179; 
foreign policy, general, 1939, 



264 Index 


41, 43, 47-48, 53, 55-58; 
foreign policy, general, 1940, 
105, 111, 114, 123, 180; 
foreign policy, general, 1941, 
151, 169, 171; intelligence 
network, 43, 47, 63; 
mobilization for war, 42-43, 
66, 125, see also Five-Year 
Plan; navy, 42, 86, 182; plans 
for war with Germany, 159, 
164, 171, 173-75, 180-81; 
press, 33-34, 124, 173; 
purges, 27-29; Russo-Finnish 
War, 90, 101, 110-11, 125; 
and the Baltic States, 80, 
124-26, 129, 134, 144, 150, 
161; and Belgium, 172; and 
Bulgaria, 146; and 
Czechoslovakia, 163; and 
Estonia, 125; and Finland, 90, 
103, 111, 124, 146, 170; and 
France, 24, 116; and 
Germany, economic, see 
Treaties, economic, Germany 
and the USSR; and Germany, 
military, 163, 172; and 
Germany, naval, 78, 90-91, 
115, 172; and Germany, 
political, see Treaties, 
political, Germany and the 
USSR; and Germany, 
transportation, general, 3, 66, 
70, 78, 102, 110, 125-26, 129, 
136, 144, 171; and Germany, 
transportation, via Poland, 81, 
89, 91, 148; and Germany, 
transportation, via Rumania, 
70, 87, 89,91, 134, 148, 160, 
see also Czemowitz Line; and 
Germany, transportation, via 
Siberia, 3, 70, 78, see also 
Trans-Siberian Railroad; and 
Great Britain, 44, 46, 48, 53, 
66, 80, 116-17, 175, 179; and 


Italy, 35, 80, 90, 135; and 
Japan, 113, 162, 170, 172; and 
Latvia, 125; and Lithuania, 
125; and Poland, 57, 66, 68; 
and Rumania, 124-26, 146, 
170, see also Bessarabia; 
Bukovina; and the United 
States, 66, 175, 179, 182; and 
Yugoslavia, 164 
United States, 65-66, 127, 136, 

175, 179, 182 

United States Strategic Bombing 
Survey, 4 

Varna, 173. See also Oil, Soviet 
shipments to Germany of 
Vladivostok, 114, 172 
Volksdeutsche, 71, 80, 129, 

134-35, 138, 144, 148 
Voroshilov, Kliment, Soviet 

Defense Commissar, 1926-40, 
57, 68 

Voznesensky, Head of Gosplan, 
Soviet Economic Planning 
Agency, 28 

War Economy and Armaments 
Office. See WiRtiAmt 
Weapons. See Military equipment; 

Naval equipment 
Weizsacker, Ernst von, AA State 
Secretary, 43, 46, 49, 54, 87, 
91-92, 127, 152, 170 
Wesseling. See Synthetic materials 
facilities 

Widia Process, 124, 129. See also 
Steel 

Wiehl, Emil, AA Head of 

Commercial Policy Division, 
32-33, 35-36 

WiRtiAmt : and German-Soviet 
economic relations, general, 
65-67, 70, 78, 81, 87, 91, 100, 
136; and the German war 



Index 265 


economy, 42, 44, 66, 146. See Zinc, 170 

also Germany, mobilization Zusatz-Ausgleichs-Verfahren 

for war (German trade subsidy), 102 

Witzell, German admiral, 125, 138 
Wolfram, 2, 124, 170. See also 
Nonferrous metals 
Wood, 66, 78, 80, 114, 129, 181 
Wood tar, 117 

Yakovlev, Alexander, Soviet 
Deputy Commissar for 
Aircraft, 86, 88, 145, 147 
Yugoslavia, 164 
Yurenev, Soviet Ambassador to 
Germany, 28-29